Correlation Between United Natural and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both United Natural 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 Natural 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 Natural Foods and Tyson Foods, you can compare the effects of market volatilities on United Natural 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 Natural with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Tyson Foods.
Diversification Opportunities for United Natural and Tyson Foods
-0.1 | Correlation Coefficient |
Good 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 Natural Foods and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and United Natural 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 Natural Foods 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 Natural i.e., United Natural and Tyson Foods go up and down completely randomly.
Pair Corralation between United Natural and Tyson Foods
Assuming the 90 days horizon United Natural Foods is expected to under-perform the Tyson Foods. In addition to that, United Natural is 2.24 times more volatile than Tyson Foods. It trades about -0.02 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.01 per unit of volatility. If you would invest 5,812 in Tyson Foods on August 24, 2024 and sell it today you would earn a total of 124.00 from holding Tyson Foods or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
United Natural Foods vs. Tyson Foods
Performance |
| Timeline |
| United Natural Foods |
| Tyson Foods |
United Natural and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Tyson Foods
The main advantage of trading using opposite United Natural and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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 Natural vs. AEON STORES | United Natural vs. National Retail Properties | United Natural vs. CosmoSteel Holdings Limited | United Natural vs. Insteel Industries |
| Tyson Foods vs. Charoen Pokphand Foods | Tyson Foods vs. Superior Plus Corp | Tyson Foods vs. NMI Holdings | Tyson Foods vs. Origin Agritech |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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