Correlation Between Tyson Foods and Lifeway Foods
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Lifeway Foods 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 Lifeway Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Lifeway Foods, you can compare the effects of market volatilities on Tyson Foods and Lifeway Foods 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 Lifeway Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Lifeway Foods.
Diversification Opportunities for Tyson Foods and Lifeway Foods
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tyson and Lifeway is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Lifeway Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeway 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 Lifeway Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeway Foods has no effect on the direction of Tyson Foods i.e., Tyson Foods and Lifeway Foods go up and down completely randomly.
Pair Corralation between Tyson Foods and Lifeway Foods
Considering the 90-day investment horizon Tyson Foods is expected to under-perform the Lifeway Foods. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.69 times less risky than Lifeway Foods. The stock trades about -0.26 of its potential returns per unit of risk. The Lifeway Foods is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,405 in Lifeway Foods on November 1, 2024 and sell it today you would lose (49.00) from holding Lifeway Foods or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. Lifeway Foods
Performance |
| Timeline |
| Tyson Foods |
| Lifeway Foods |
Tyson Foods and Lifeway Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Lifeway Foods
The main advantage of trading using opposite Tyson Foods and Lifeway Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Lifeway Foods 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 Lifeway Foods will offset losses from the drop in Lifeway Foods' long position.| Tyson Foods vs. Bunge Limited | Tyson Foods vs. Cal Maine Foods | Tyson Foods vs. Dole PLC | Tyson Foods vs. Adecoagro SA |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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