Correlation Between Tyson Foods and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and SMA Solar Technology, you can compare the effects of market volatilities on Tyson Foods and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and SMA Solar.
Diversification Opportunities for Tyson Foods and SMA Solar
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tyson and SMA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Tyson Foods i.e., Tyson Foods and SMA Solar go up and down completely randomly.
Pair Corralation between Tyson Foods and SMA Solar
Assuming the 90 days trading horizon Tyson Foods is expected to generate 6.66 times less return on investment than SMA Solar. But when comparing it to its historical volatility, Tyson Foods is 2.31 times less risky than SMA Solar. It trades about 0.05 of its potential returns per unit of risk. SMA Solar Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,483 in SMA Solar Technology on November 22, 2024 and sell it today you would earn a total of 171.00 from holding SMA Solar Technology or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tyson Foods vs. SMA Solar Technology
Performance |
| Timeline |
| Tyson Foods |
| SMA Solar Technology |
Tyson Foods and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and SMA Solar
The main advantage of trading using opposite Tyson Foods and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Tyson Foods vs. ADRIATIC METALS LS 013355 | Tyson Foods vs. Sumitomo Rubber Industries | Tyson Foods vs. Goodyear Tire Rubber | Tyson Foods vs. APPLIED MATERIALS |
| SMA Solar vs. Sligro Food Group | SMA Solar vs. Ebro Foods SA | SMA Solar vs. Nufarm Limited | SMA Solar vs. China Railway Construction |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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