Correlation Between Tyson Foods and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Merit Medical Systems, you can compare the effects of market volatilities on Tyson Foods and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Merit Medical.
Diversification Opportunities for Tyson Foods and Merit Medical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tyson and Merit is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Tyson Foods i.e., Tyson Foods and Merit Medical go up and down completely randomly.
Pair Corralation between Tyson Foods and Merit Medical
Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Merit Medical. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.13 times less risky than Merit Medical. The stock trades about -0.33 of its potential returns per unit of risk. The Merit Medical Systems is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 9,950 in Merit Medical Systems on September 24, 2024 and sell it today you would lose (700.00) from holding Merit Medical Systems or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tyson Foods vs. Merit Medical Systems
Performance |
| Timeline |
| Tyson Foods |
| Merit Medical Systems |
Tyson Foods and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Merit Medical
The main advantage of trading using opposite Tyson Foods and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Tyson Foods vs. Archer Daniels Midland | Tyson Foods vs. Wilmar International Limited | Tyson Foods vs. MOWI ASA SPADR | Tyson Foods vs. Mowi ASA |
| Merit Medical vs. HOCHSCHILD MINING | Merit Medical vs. Western Copper and | Merit Medical vs. GameStop Corp | Merit Medical vs. FUTURE GAMING GRP |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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