Correlation Between MAGNA INTL and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both MAGNA INTL 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 MAGNA INTL and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGNA INTL and Tyson Foods, you can compare the effects of market volatilities on MAGNA INTL 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 MAGNA INTL with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNA INTL and Tyson Foods.
Diversification Opportunities for MAGNA INTL and Tyson Foods
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAGNA and Tyson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MAGNA INTL and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and MAGNA INTL 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 MAGNA INTL 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 MAGNA INTL i.e., MAGNA INTL and Tyson Foods go up and down completely randomly.
Pair Corralation between MAGNA INTL and Tyson Foods
Assuming the 90 days trading horizon MAGNA INTL is expected to under-perform the Tyson Foods. In addition to that, MAGNA INTL is 1.2 times more volatile than Tyson Foods. It trades about -0.13 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.14 per unit of volatility. If you would invest 5,560 in Tyson Foods on November 28, 2024 and sell it today you would earn a total of 275.00 from holding Tyson Foods or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MAGNA INTL vs. Tyson Foods
Performance |
| Timeline |
| MAGNA INTL |
| Tyson Foods |
MAGNA INTL and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGNA INTL and Tyson Foods
The main advantage of trading using opposite MAGNA INTL and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNA INTL 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.| MAGNA INTL vs. COMBA TELECOM SYST | MAGNA INTL vs. Perseus Mining Limited | MAGNA INTL vs. Comba Telecom Systems | MAGNA INTL vs. Entravision Communications |
| Tyson Foods vs. HOCHSCHILD MINING | Tyson Foods vs. Pembina Pipeline Corp | Tyson Foods vs. Clean Harbors | Tyson Foods vs. PLAYMATES TOYS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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