Correlation Between ChampionX and Tyson Foods

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

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

Diversification Opportunities for ChampionX and Tyson Foods

0.21

Correlation Coefficient

ChampionX  Tyson Foods

Modest diversification

The 3 months correlation between ChampionX and Tyson is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and ChampionX 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 ChampionX 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 ChampionX i.e., ChampionX and Tyson Foods go up and down completely randomly.

Pair Corralation between ChampionX and Tyson Foods

Considering the 90-day investment horizon ChampionX is expected to generate 1.49 times more return on investment than Tyson Foods. However, ChampionX is 1.49 times more volatile than Tyson Foods. It trades about 0.11 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.13 per unit of risk. If you would invest  2,661  in ChampionX on December 29, 2024 and sell it today you would earn a total of  354.00  from holding ChampionX or generate 13.3% return on investment over 90 days.

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

ChampionX  vs.  Tyson Foods

ChampionX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, ChampionX showed solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Tyson Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ChampionX and Tyson Foods

The main advantage of trading using opposite ChampionX and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX 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 ChampionX 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 Transaction History module to view history of all your transactions and understand their impact on performance.