Correlation Between PENN NATL and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both PENN NATL 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 PENN NATL and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and Tyson Foods, you can compare the effects of market volatilities on PENN NATL 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 PENN NATL with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and Tyson Foods.
Diversification Opportunities for PENN NATL and Tyson Foods
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PENN and Tyson is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and PENN NATL 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 PENN NATL GAMING 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 PENN NATL i.e., PENN NATL and Tyson Foods go up and down completely randomly.
Pair Corralation between PENN NATL and Tyson Foods
Assuming the 90 days trading horizon PENN NATL is expected to generate 1.08 times less return on investment than Tyson Foods. In addition to that, PENN NATL is 1.27 times more volatile than Tyson Foods. It trades about 0.18 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.25 per unit of volatility. If you would invest 5,450 in Tyson Foods on August 30, 2024 and sell it today you would earn a total of 615.00 from holding Tyson Foods or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. Tyson Foods
Performance |
| Timeline |
| PENN NATL GAMING |
| Tyson Foods |
PENN NATL and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and Tyson Foods
The main advantage of trading using opposite PENN NATL and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL 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.| PENN NATL vs. Apple Inc | PENN NATL vs. Apple Inc | PENN NATL vs. Superior Plus Corp | PENN NATL vs. SIVERS SEMICONDUCTORS AB |
| Tyson Foods vs. Tsingtao Brewery | Tyson Foods vs. Zurich Insurance Group | Tyson Foods vs. HANOVER INSURANCE | Tyson Foods vs. ZURICH INSURANCE GROUP |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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