Correlation Between Penn National and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Penn National 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 National 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 National Gaming and Tyson Foods, you can compare the effects of market volatilities on Penn National 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 National with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penn National and Tyson Foods.
Diversification Opportunities for Penn National and Tyson Foods
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penn and Tyson is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Penn National 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 National 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 National 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 National i.e., Penn National and Tyson Foods go up and down completely randomly.
Pair Corralation between Penn National and Tyson Foods
Assuming the 90 days horizon Penn National is expected to generate 1.37 times less return on investment than Tyson Foods. In addition to that, Penn National is 1.37 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 0.34 per unit of volatility. If you would invest 5,331 in Tyson Foods on September 2, 2024 and sell it today you would earn a total of 805.00 from holding Tyson Foods or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penn National Gaming vs. Tyson Foods
Performance |
| Timeline |
| Penn National Gaming |
| Tyson Foods |
Penn National and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penn National and Tyson Foods
The main advantage of trading using opposite Penn National and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penn National 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 National vs. Superior Plus Corp | Penn National vs. NMI Holdings | Penn National vs. Origin Agritech | Penn National vs. SIVERS SEMICONDUCTORS AB |
| Tyson Foods vs. SalMar ASA | Tyson Foods vs. Superior Plus Corp | Tyson Foods vs. NMI Holdings | Tyson Foods vs. Origin Agritech |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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