Correlation Between Nike and TYSON FOODS

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Can any of the company-specific risk be diversified away by investing in both Nike 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 Nike and TYSON FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and TYSON FOODS A , you can compare the effects of market volatilities on Nike 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 Nike with a short position of TYSON FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and TYSON FOODS.

Diversification Opportunities for Nike and TYSON FOODS

NikeTYSONDiversified AwayNikeTYSONDiversified Away100%
0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nike and TYSON is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nike 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 Nike 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 Nike 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 Nike i.e., Nike and TYSON FOODS go up and down completely randomly.

Pair Corralation between Nike and TYSON FOODS

Assuming the 90 days trading horizon Nike Inc is expected to generate 1.19 times more return on investment than TYSON FOODS. However, Nike is 1.19 times more volatile than TYSON FOODS A . It trades about -0.01 of its potential returns per unit of risk. TYSON FOODS A is currently generating about -0.09 per unit of risk. If you would invest  7,516  in Nike Inc on November 25, 2024 and sell it today you would lose (148.00) from holding Nike Inc or give up 1.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nike Inc  vs.  TYSON FOODS A

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15NKE TF7A
       Timeline  
Nike Inc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nike is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6870727476
TYSON FOODS A 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days TYSON FOODS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb535455565758596061

Nike and TYSON FOODS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.26-3.94-2.62-1.30.01.322.653.995.33 0.050.100.150.20
JavaScript chart by amCharts 3.21.15NKE TF7A
       Returns  

Pair Trading with Nike and TYSON FOODS

The main advantage of trading using opposite Nike and TYSON FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike 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 Nike 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.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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