Correlation Between Under Armour and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Under Armour and Tyson 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 Under Armour and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour and Tyson Foods, you can compare the effects of market volatilities on Under Armour and Tyson 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 Under Armour with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Tyson Foods.
Diversification Opportunities for Under Armour and Tyson Foods
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Under and Tyson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Under Armour 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 Under Armour are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Under Armour i.e., Under Armour and Tyson Foods go up and down completely randomly.
Pair Corralation between Under Armour and Tyson Foods
Assuming the 90 days trading horizon Under Armour is expected to generate 1.29 times more return on investment than Tyson Foods. However, Under Armour is 1.29 times more volatile than Tyson Foods. It trades about 0.25 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.11 per unit of risk. If you would invest 4,955 in Under Armour on September 13, 2024 and sell it today you would earn a total of 499.00 from holding Under Armour or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Under Armour vs. Tyson Foods
Performance |
| Timeline |
| Under Armour |
| Tyson Foods |
Under Armour and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Tyson Foods
The main advantage of trading using opposite Under Armour and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Tyson 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 Tyson Foods will offset losses from the drop in Tyson Foods' long position.| Under Armour vs. Charter Communications | Under Armour vs. Broadcom | Under Armour vs. Electronic Arts | Under Armour vs. Delta Air Lines |
| Tyson Foods vs. SLC Agrcola SA | Tyson Foods vs. Minerva SA | Tyson Foods vs. BrasilAgro Companhia | Tyson Foods vs. Bahema Educao SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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