Correlation Between WEC Energy and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both WEC Energy 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 WEC Energy and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEC Energy Group and Tyson Foods, you can compare the effects of market volatilities on WEC Energy 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 WEC Energy with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEC Energy and Tyson Foods.
Diversification Opportunities for WEC Energy and Tyson Foods
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between WEC and Tyson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding WEC Energy Group and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and WEC Energy 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 WEC Energy Group 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 WEC Energy i.e., WEC Energy and Tyson Foods go up and down completely randomly.
Pair Corralation between WEC Energy and Tyson Foods
Considering the 90-day investment horizon WEC Energy Group is expected to generate 0.75 times more return on investment than Tyson Foods. However, WEC Energy Group is 1.34 times less risky than Tyson Foods. It trades about 0.02 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.02 per unit of risk. If you would invest 9,089 in WEC Energy Group on September 2, 2024 and sell it today you would earn a total of 1,016 from holding WEC Energy Group or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WEC Energy Group vs. Tyson Foods
Performance |
| Timeline |
| WEC Energy Group |
| Tyson Foods |
WEC Energy and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WEC Energy and Tyson Foods
The main advantage of trading using opposite WEC Energy and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEC Energy 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.| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
| Tyson Foods vs. Campbell Soup | Tyson Foods vs. ConAgra Foods | Tyson Foods vs. Hormel Foods | Tyson Foods vs. Kellanova |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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