Correlation Between Tyson Foods and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Metalurgica Gerdau 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 Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Metalurgica Gerdau SA, you can compare the effects of market volatilities on Tyson Foods and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Metalurgica Gerdau.
Diversification Opportunities for Tyson Foods and Metalurgica Gerdau
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tyson and Metalurgica is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of Tyson Foods i.e., Tyson Foods and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between Tyson Foods and Metalurgica Gerdau
Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Metalurgica Gerdau. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.45 times less risky than Metalurgica Gerdau. The stock trades about -0.25 of its potential returns per unit of risk. The Metalurgica Gerdau SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,011 in Metalurgica Gerdau SA on November 3, 2024 and sell it today you would lose (49.00) from holding Metalurgica Gerdau SA or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tyson Foods vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| Tyson Foods |
| Metalurgica Gerdau |
Tyson Foods and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Metalurgica Gerdau
The main advantage of trading using opposite Tyson Foods and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| Tyson Foods vs. British American Tobacco | Tyson Foods vs. Omega Healthcare Investors, | Tyson Foods vs. CM Hospitalar SA | Tyson Foods vs. Microchip Technology Incorporated |
| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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