Correlation Between Ingredion Incorporated and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated and Tyson Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ingredion Incorporated and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Tyson Foods, you can compare the effects of market volatilities on Ingredion Incorporated and Tyson Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ingredion Incorporated with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Tyson Foods.
Diversification Opportunities for Ingredion Incorporated and Tyson Foods
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ingredion and Tyson is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Ingredion Incorporated is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ingredion Incorporated are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Ingredion Incorporated i.e., Ingredion Incorporated and Tyson Foods go up and down completely randomly.
Pair Corralation between Ingredion Incorporated and Tyson Foods
Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 2.21 times more return on investment than Tyson Foods. However, Ingredion Incorporated is 2.21 times more volatile than Tyson Foods. It trades about 0.14 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.21 per unit of risk. If you would invest 13,484 in Ingredion Incorporated on August 29, 2024 and sell it today you would earn a total of 1,396 from holding Ingredion Incorporated or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingredion Incorporated vs. Tyson Foods
Performance |
| Timeline |
| Ingredion Incorporated |
| Tyson Foods |
Ingredion Incorporated and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingredion Incorporated and Tyson Foods
The main advantage of trading using opposite Ingredion Incorporated and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated position performs unexpectedly, Tyson Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tyson Foods will offset losses from the drop in Tyson Foods' long position.| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
| Tyson Foods vs. Bellring Brands LLC | Tyson Foods vs. Ingredion Incorporated | Tyson Foods vs. Nomad Foods | Tyson Foods vs. Simply Good Foods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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