Correlation Between UNICREDIT SPA and TYSON FOODS

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

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

Diversification Opportunities for UNICREDIT SPA and TYSON FOODS

0.58

Correlation Coefficient

UNICREDIT SPA  TYSON FOODS

Very weak diversification

The 3 months correlation between UNICREDIT and TYSON is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding UNICREDIT SPA ADR 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 UNICREDIT SPA 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 UNICREDIT SPA ADR 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 UNICREDIT SPA i.e., UNICREDIT SPA and TYSON FOODS go up and down completely randomly.

Pair Corralation between UNICREDIT SPA and TYSON FOODS

Assuming the 90 days trading horizon UNICREDIT SPA ADR is expected to generate 1.29 times more return on investment than TYSON FOODS. However, UNICREDIT SPA is 1.29 times more volatile than TYSON FOODS A . It trades about 0.26 of its potential returns per unit of risk. TYSON FOODS A is currently generating about 0.06 per unit of risk. If you would invest  1,960  in UNICREDIT SPA ADR on December 30, 2024 and sell it today you would earn a total of  700.00  from holding UNICREDIT SPA ADR or generate 35.71% return on investment over 90 days.

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

UNICREDIT SPA ADR  vs.  TYSON FOODS A

UNICREDIT SPA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UNICREDIT SPA ADR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UNICREDIT SPA reported solid returns over the last few months and may actually be approaching a breakup point.

TYSON FOODS A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TYSON FOODS A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, TYSON FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UNICREDIT SPA and TYSON FOODS

The main advantage of trading using opposite UNICREDIT SPA and TYSON FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNICREDIT SPA 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 UNICREDIT SPA ADR 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.