Correlation Between TYSON FOODS and Marsh McLennan
Can any of the company-specific risk be diversified away by investing in both TYSON FOODS and Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan Companies, you can compare the effects of market volatilities on TYSON FOODS and Marsh McLennan 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 Marsh McLennan. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYSON FOODS and Marsh McLennan.
Diversification Opportunities for TYSON FOODS and Marsh McLennan
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TYSON and Marsh is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and Marsh McLennan Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsh McLennan Companies 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 Marsh McLennan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsh McLennan Companies has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and Marsh McLennan go up and down completely randomly.
Pair Corralation between TYSON FOODS and Marsh McLennan
Assuming the 90 days trading horizon TYSON FOODS is expected to generate 11.0 times less return on investment than Marsh McLennan. In addition to that, TYSON FOODS is 1.47 times more volatile than Marsh McLennan Companies. It trades about 0.0 of its total potential returns per unit of risk. Marsh McLennan Companies is currently generating about 0.06 per unit of volatility. If you would invest 15,335 in Marsh McLennan Companies on October 27, 2024 and sell it today you would earn a total of 5,525 from holding Marsh McLennan Companies or generate 36.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TYSON FOODS A vs. Marsh McLennan Companies
Performance |
| Timeline |
| TYSON FOODS A |
| Marsh McLennan Companies |
TYSON FOODS and Marsh McLennan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TYSON FOODS and Marsh McLennan
The main advantage of trading using opposite TYSON FOODS and Marsh McLennan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYSON FOODS position performs unexpectedly, Marsh McLennan 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 Marsh McLennan will offset losses from the drop in Marsh McLennan's long position.| TYSON FOODS vs. Apple Inc | TYSON FOODS vs. Apple Inc | TYSON FOODS vs. Apple Inc | TYSON FOODS vs. Apple Inc |
| Marsh McLennan vs. GALENA MINING LTD | Marsh McLennan vs. Richardson Electronics | Marsh McLennan vs. GREENX METALS LTD | Marsh McLennan vs. STMICROELECTRONICS |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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