Correlation Between Tyson Foods and Intercontinental
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Intercontinental 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 Intercontinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Intercontinental Exchange, you can compare the effects of market volatilities on Tyson Foods and Intercontinental 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 Intercontinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Intercontinental.
Diversification Opportunities for Tyson Foods and Intercontinental
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tyson and Intercontinental is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Intercontinental Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercontinental Exchange 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 are associated (or correlated) with Intercontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercontinental Exchange has no effect on the direction of Tyson Foods i.e., Tyson Foods and Intercontinental go up and down completely randomly.
Pair Corralation between Tyson Foods and Intercontinental
Assuming the 90 days trading horizon Tyson Foods is expected to generate 1.36 times less return on investment than Intercontinental. In addition to that, Tyson Foods is 1.49 times more volatile than Intercontinental Exchange. It trades about 0.05 of its total potential returns per unit of risk. Intercontinental Exchange is currently generating about 0.11 per unit of volatility. If you would invest 14,698 in Intercontinental Exchange on September 13, 2024 and sell it today you would earn a total of 338.00 from holding Intercontinental Exchange or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tyson Foods vs. Intercontinental Exchange
Performance |
| Timeline |
| Tyson Foods |
| Intercontinental Exchange |
Tyson Foods and Intercontinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Intercontinental
The main advantage of trading using opposite Tyson Foods and Intercontinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Intercontinental 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 Intercontinental will offset losses from the drop in Intercontinental's long position.| Tyson Foods vs. International Game Technology | Tyson Foods vs. Commercial Vehicle Group | Tyson Foods vs. Pembina Pipeline Corp | Tyson Foods vs. Perseus Mining Limited |
| Intercontinental vs. CME Group | Intercontinental vs. Hong Kong Exchanges | Intercontinental vs. London Stock Exchange | Intercontinental vs. Deutsche Brse AG |
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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