Correlation Between Tyson Foods and CME
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and CME 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 CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and CME Group, you can compare the effects of market volatilities on Tyson Foods and CME 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 CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and CME.
Diversification Opportunities for Tyson Foods and CME
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tyson and CME is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group 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 CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Tyson Foods i.e., Tyson Foods and CME go up and down completely randomly.
Pair Corralation between Tyson Foods and CME
Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the CME. In addition to that, Tyson Foods is 1.41 times more volatile than CME Group. It trades about -0.03 of its total potential returns per unit of risk. CME Group is currently generating about 0.16 per unit of volatility. If you would invest 18,446 in CME Group on November 2, 2024 and sell it today you would earn a total of 3,874 from holding CME Group or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. CME Group
Performance |
| Timeline |
| Tyson Foods |
| CME Group |
Tyson Foods and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and CME
The main advantage of trading using opposite Tyson Foods and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Tyson Foods vs. Corporate Office Properties | Tyson Foods vs. CITY OFFICE REIT | Tyson Foods vs. Computershare Limited | Tyson Foods vs. ScanSource |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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