Correlation Between KRISPY KREME and Tyson Foods

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Tyson Foods, you can compare the effects of market volatilities on KRISPY KREME 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 KRISPY KREME with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Tyson Foods.

Diversification Opportunities for KRISPY KREME and Tyson Foods

0.18

Correlation Coefficient

KRISPY KREME  Tyson Foods

Average diversification

The 3 months correlation between KRISPY and Tyson is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and KRISPY KREME 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 KRISPY KREME DL 01 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 KRISPY KREME i.e., KRISPY KREME and Tyson Foods go up and down completely randomly.

Pair Corralation between KRISPY KREME and Tyson Foods

Assuming the 90 days horizon KRISPY KREME is expected to generate 3.33 times less return on investment than Tyson Foods. In addition to that, KRISPY KREME is 1.73 times more volatile than Tyson Foods. It trades about 0.06 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.32 per unit of volatility. If you would invest  5,332  in Tyson Foods on September 1, 2024 and sell it today you would earn a total of  761.00  from holding Tyson Foods or generate 14.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

KRISPY KREME DL 01  vs.  Tyson Foods

KRISPY KREME DL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KRISPY KREME DL 01 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KRISPY KREME is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tyson Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tyson Foods may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with KRISPY KREME and Tyson Foods

The main advantage of trading using opposite KRISPY KREME and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME 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.

The idea behind KRISPY KREME DL 01 and Tyson Foods 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.