Correlation Between Tyson Foods and LION ONE
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and LION ONE 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 LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and LION ONE METALS, you can compare the effects of market volatilities on Tyson Foods and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and LION ONE.
Diversification Opportunities for Tyson Foods and LION ONE
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tyson and LION is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Tyson Foods i.e., Tyson Foods and LION ONE go up and down completely randomly.
Pair Corralation between Tyson Foods and LION ONE
Assuming the 90 days trading horizon Tyson Foods is expected to generate 0.35 times more return on investment than LION ONE. However, Tyson Foods is 2.85 times less risky than LION ONE. It trades about 0.08 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.03 per unit of risk. If you would invest 4,826 in Tyson Foods on August 25, 2024 and sell it today you would earn a total of 1,136 from holding Tyson Foods or generate 23.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. LION ONE METALS
Performance |
| Timeline |
| Tyson Foods |
| LION ONE METALS |
Tyson Foods and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and LION ONE
The main advantage of trading using opposite Tyson Foods and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Tyson Foods vs. Charoen Pokphand Foods | 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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