Correlation Between Tyson Foods and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and Lululemon Athletica 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 Lululemon Athletica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and Lululemon Athletica, you can compare the effects of market volatilities on Tyson Foods and Lululemon Athletica 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 Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Lululemon Athletica.
Diversification Opportunities for Tyson Foods and Lululemon Athletica
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tyson and Lululemon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Tyson Foods i.e., Tyson Foods and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Tyson Foods and Lululemon Athletica
Assuming the 90 days trading horizon Tyson Foods is expected to generate 3.81 times less return on investment than Lululemon Athletica. But when comparing it to its historical volatility, Tyson Foods is 3.76 times less risky than Lululemon Athletica. It trades about 0.28 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 45,980 in Lululemon Athletica on September 13, 2024 and sell it today you would earn a total of 13,601 from holding Lululemon Athletica or generate 29.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Tyson Foods vs. Lululemon Athletica
Performance |
| Timeline |
| Tyson Foods |
| Lululemon Athletica |
Tyson Foods and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and Lululemon Athletica
The main advantage of trading using opposite Tyson Foods and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| Tyson Foods vs. Spotify Technology SA | Tyson Foods vs. Palantir Technologies | Tyson Foods vs. Livetech da Bahia | Tyson Foods vs. Dell Technologies |
| Lululemon Athletica vs. Global X Funds | Lululemon Athletica vs. Fidelity National Information | Lululemon Athletica vs. Southwest Airlines Co | Lululemon Athletica vs. Nordon Indstrias Metalrgicas |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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