Correlation Between TYSON FOODS and Phillips
Can any of the company-specific risk be diversified away by investing in both TYSON FOODS and Phillips 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 Phillips 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 Phillips 66, you can compare the effects of market volatilities on TYSON FOODS and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYSON FOODS and Phillips.
Diversification Opportunities for TYSON FOODS and Phillips
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TYSON and Phillips is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and Phillips go up and down completely randomly.
Pair Corralation between TYSON FOODS and Phillips
Assuming the 90 days trading horizon TYSON FOODS is expected to generate 1.92 times less return on investment than Phillips. But when comparing it to its historical volatility, TYSON FOODS A is 1.1 times less risky than Phillips. It trades about 0.03 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,937 in Phillips 66 on December 12, 2024 and sell it today you would earn a total of 3,333 from holding Phillips 66 or generate 41.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TYSON FOODS A vs. Phillips 66
Performance |
| Timeline |
| TYSON FOODS A |
| Phillips 66 |
TYSON FOODS and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TYSON FOODS and Phillips
The main advantage of trading using opposite TYSON FOODS and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYSON FOODS position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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