Correlation Between Tyson Foods and AstraZeneca PLC

Can any of the company-specific risk be diversified away by investing in both Tyson Foods and AstraZeneca PLC 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 AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tyson Foods Cl and AstraZeneca PLC, you can compare the effects of market volatilities on Tyson Foods and AstraZeneca PLC 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 AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and AstraZeneca PLC.

Diversification Opportunities for Tyson Foods and AstraZeneca PLC

0.63

Correlation Coefficient

Tyson Foods  AstraZeneca PLC

Poor diversification

The 3 months correlation between Tyson and AstraZeneca is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods Cl and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 Cl are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Tyson Foods i.e., Tyson Foods and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Tyson Foods and AstraZeneca PLC

Assuming the 90 days trading horizon Tyson Foods is expected to generate 2.01 times less return on investment than AstraZeneca PLC. But when comparing it to its historical volatility, Tyson Foods Cl is 1.06 times less risky than AstraZeneca PLC. It trades about 0.07 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,043,450  in AstraZeneca PLC on December 24, 2024 and sell it today you would earn a total of  117,350  from holding AstraZeneca PLC or generate 11.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Tyson Foods Cl  vs.  AstraZeneca PLC

Tyson Foods Cl

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods Cl are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Tyson Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AstraZeneca PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AstraZeneca PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tyson Foods and AstraZeneca PLC

The main advantage of trading using opposite Tyson Foods and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.

The idea behind Tyson Foods Cl and AstraZeneca PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.