Correlation Between Tyson Foods and Nike
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Nike Inc, you can compare the effects of market volatilities on Tyson Foods and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Nike.
Diversification Opportunities for Tyson Foods and Nike
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tyson and Nike is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Tyson Foods i.e., Tyson Foods and Nike go up and down completely randomly.
Pair Corralation between Tyson Foods and Nike
Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Nike. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.12 times less risky than Nike. The stock trades about -0.36 of its potential returns per unit of risk. The Nike Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7,383 in Nike Inc on September 28, 2024 and sell it today you would lose (43.00) from holding Nike Inc or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. Nike Inc
Performance |
| Timeline |
| Tyson Foods |
| Nike Inc |
Tyson Foods and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Nike
The main advantage of trading using opposite Tyson Foods and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Tyson Foods vs. Archer Daniels Midland | Tyson Foods vs. MOWI ASA SPADR | Tyson Foods vs. Mowi ASA | Tyson Foods vs. PT Charoen Pokphand |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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