Correlation Between United Airlines and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 United Airlines and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Airlines Holdings and Tyson Foods, you can compare the effects of market volatilities on United Airlines 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 United Airlines with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Tyson Foods.
Diversification Opportunities for United Airlines and Tyson Foods
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Tyson is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and United Airlines 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 United Airlines Holdings 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 United Airlines i.e., United Airlines and Tyson Foods go up and down completely randomly.
Pair Corralation between United Airlines and Tyson Foods
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 1.03 times more return on investment than Tyson Foods. However, United Airlines is 1.03 times more volatile than Tyson Foods. It trades about 0.08 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.02 per unit of risk. If you would invest 12,954 in United Airlines Holdings on November 6, 2024 and sell it today you would earn a total of 17,726 from holding United Airlines Holdings or generate 136.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.1% |
| Values | Daily Returns |
United Airlines Holdings vs. Tyson Foods
Performance |
| Timeline |
| United Airlines Holdings |
| Tyson Foods |
United Airlines and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Tyson Foods
The main advantage of trading using opposite United Airlines and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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.| United Airlines vs. Delta Air Lines | United Airlines vs. American Airlines Group | United Airlines vs. Alaska Air Group, | United Airlines vs. Gol Linhas Areas |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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