Correlation Between GE Vernova and Tyson Foods

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

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

Diversification Opportunities for GE Vernova and Tyson Foods

0.59

Correlation Coefficient

GE Vernova  Tyson Foods

Very weak diversification

The 3 months correlation between GEV and Tyson is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Tyson Foods go up and down completely randomly.

Pair Corralation between GE Vernova and Tyson Foods

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 4.39 times more return on investment than Tyson Foods. However, GE Vernova is 4.39 times more volatile than Tyson Foods. It trades about 0.03 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.59 per unit of risk. If you would invest  33,959  in GE Vernova LLC on September 22, 2024 and sell it today you would earn a total of  307.00  from holding GE Vernova LLC or generate 0.9% return on investment over 90 days.

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

GE Vernova LLC  vs.  Tyson Foods

GE Vernova LLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GE Vernova and Tyson Foods

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

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.