Correlation Between Tyson Foods and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Maple Leaf 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 Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Maple Leaf Foods, you can compare the effects of market volatilities on Tyson Foods and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Maple Leaf.
Diversification Opportunities for Tyson Foods and Maple Leaf
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tyson and Maple is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of Tyson Foods i.e., Tyson Foods and Maple Leaf go up and down completely randomly.
Pair Corralation between Tyson Foods and Maple Leaf
Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Maple Leaf. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.05 times less risky than Maple Leaf. The stock trades about -0.1 of its potential returns per unit of risk. The Maple Leaf Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,360 in Maple Leaf Foods on November 5, 2024 and sell it today you would earn a total of 40.00 from holding Maple Leaf Foods or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. Maple Leaf Foods
Performance |
| Timeline |
| Tyson Foods |
| Maple Leaf Foods |
Tyson Foods and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Maple Leaf
The main advantage of trading using opposite Tyson Foods and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| Tyson Foods vs. URBAN OUTFITTERS | Tyson Foods vs. MAGIC SOFTWARE ENTR | Tyson Foods vs. ATOSS SOFTWARE | Tyson Foods vs. Urban Outfitters |
| Maple Leaf vs. BURLINGTON STORES | Maple Leaf vs. MARKET VECTR RETAIL | Maple Leaf vs. COSTCO WHOLESALE CDR | Maple Leaf vs. ANTA SPORTS PRODUCT |
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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