Correlation Between International Consolidated and Tyson Foods

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

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

Diversification Opportunities for International Consolidated and Tyson Foods

0.23

Correlation Coefficient

International Consolidated  Tyson Foods

Modest diversification

The 3 months correlation between International and Tyson is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Tyson Foods Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods Cl and International Consolidated 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 International Consolidated Airlines 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 Cl has no effect on the direction of International Consolidated i.e., International Consolidated and Tyson Foods go up and down completely randomly.

Pair Corralation between International Consolidated and Tyson Foods

Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.15 times more return on investment than Tyson Foods. However, International Consolidated is 1.15 times more volatile than Tyson Foods Cl. It trades about 0.08 of its potential returns per unit of risk. Tyson Foods Cl is currently generating about -0.01 per unit of risk. If you would invest  15,654  in International Consolidated Airlines on October 5, 2024 and sell it today you would earn a total of  14,606  from holding International Consolidated Airlines or generate 93.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.0%
Values	Daily Returns

International Consolidated Air  vs.  Tyson Foods Cl

International Consolidated

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyson Foods Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tyson Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with International Consolidated and Tyson Foods

The main advantage of trading using opposite International Consolidated and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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 International Consolidated Airlines and Tyson Foods Cl 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .