Correlation Between TYSON FOODS and Axfood AB
Can any of the company-specific risk be diversified away by investing in both TYSON FOODS and Axfood AB 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 TYSON FOODS and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TYSON FOODS A and Axfood AB, you can compare the effects of market volatilities on TYSON FOODS and Axfood AB 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 TYSON FOODS with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYSON FOODS and Axfood AB.
Diversification Opportunities for TYSON FOODS and Axfood AB
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TYSON and Axfood is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and TYSON FOODS 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 TYSON FOODS A are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and Axfood AB go up and down completely randomly.
Pair Corralation between TYSON FOODS and Axfood AB
Assuming the 90 days trading horizon TYSON FOODS is expected to generate 1.02 times less return on investment than Axfood AB. But when comparing it to its historical volatility, TYSON FOODS A is 1.01 times less risky than Axfood AB. It trades about 0.09 of its potential returns per unit of risk. Axfood AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,983 in Axfood AB on December 11, 2024 and sell it today you would earn a total of 106.00 from holding Axfood AB or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
TYSON FOODS A vs. Axfood AB
Performance |
| Timeline |
| TYSON FOODS A |
| Axfood AB |
TYSON FOODS and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TYSON FOODS and Axfood AB
The main advantage of trading using opposite TYSON FOODS and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYSON FOODS position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| TYSON FOODS vs. TOMBADOR IRON LTD | ||
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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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