Correlation Between Swiss Life and Tyson Foods

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

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

Diversification Opportunities for Swiss Life and Tyson Foods

0.67

Correlation Coefficient

Swiss Life  Tyson Foods

Poor diversification

The 3 months correlation between Swiss and Tyson is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Life Holding and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Swiss Life 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 Swiss Life Holding 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 Swiss Life i.e., Swiss Life and Tyson Foods go up and down completely randomly.

Pair Corralation between Swiss Life and Tyson Foods

Assuming the 90 days trading horizon Swiss Life Holding is expected to generate 1.04 times more return on investment than Tyson Foods. However, Swiss Life is 1.04 times more volatile than Tyson Foods. It trades about 0.09 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.02 per unit of risk. If you would invest  3,800  in Swiss Life Holding on December 21, 2024 and sell it today you would earn a total of  320.00  from holding Swiss Life Holding or generate 8.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Swiss Life Holding  vs.  Tyson Foods

Swiss Life Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Swiss Life may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tyson Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Swiss Life and Tyson Foods

The main advantage of trading using opposite Swiss Life and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Life 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 Swiss Life Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.