Correlation Between Apple and TYSON FOODS

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

By analyzing existing cross correlation between Apple Inc and TYSON FOODS A , you can compare the effects of market volatilities on Apple 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 Apple with a short position of TYSON FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and TYSON FOODS.

Diversification Opportunities for Apple and TYSON FOODS

0.73

Correlation Coefficient

Apple  TYSON FOODS

Poor diversification

The 3 months correlation between Apple and TYSON is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and TYSON FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSON FOODS A and Apple 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 Apple Inc 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 A has no effect on the direction of Apple i.e., Apple and TYSON FOODS go up and down completely randomly.

Pair Corralation between Apple and TYSON FOODS

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.9 times more return on investment than TYSON FOODS. However, Apple Inc is 1.11 times less risky than TYSON FOODS. It trades about 0.23 of its potential returns per unit of risk. TYSON FOODS A is currently generating about 0.08 per unit of risk. If you would invest  19,353  in Apple Inc on September 14, 2024 and sell it today you would earn a total of  4,267  from holding Apple Inc or generate 22.05% return on investment over 90 days.

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

Apple Inc  vs.  TYSON FOODS A

Apple Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

TYSON FOODS A

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TYSON FOODS A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, TYSON FOODS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and TYSON FOODS

The main advantage of trading using opposite Apple and TYSON FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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's long position.

The idea behind Apple Inc and TYSON FOODS A 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.