Correlation Between TYSON FOODS and Fiskars Oyj

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

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

Diversification Opportunities for TYSON FOODS and Fiskars Oyj

0.56

Correlation Coefficient

TYSON FOODS  Fiskars Oyj

Very weak diversification

The 3 months correlation between TYSON and Fiskars is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and Fiskars Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiskars Oyj Abp and TYSON FOODS 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 TYSON FOODS A are associated (or correlated) with Fiskars Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiskars Oyj Abp has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and Fiskars Oyj go up and down completely randomly.

Pair Corralation between TYSON FOODS and Fiskars Oyj

Assuming the 90 days trading horizon TYSON FOODS is expected to generate 6.03 times less return on investment than Fiskars Oyj. But when comparing it to its historical volatility, TYSON FOODS A is 1.26 times less risky than Fiskars Oyj. It trades about 0.03 of its potential returns per unit of risk. Fiskars Oyj Abp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,394  in Fiskars Oyj Abp on December 22, 2024 and sell it today you would earn a total of  204.00  from holding Fiskars Oyj Abp or generate 14.63% return on investment over 90 days.

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

TYSON FOODS A   vs.  Fiskars Oyj Abp

TYSON FOODS A

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TYSON FOODS A are ranked lower than 2 (%) 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.

Fiskars Oyj Abp

Risk-Adjusted Performance

OK

Over the last 90 days Fiskars Oyj Abp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Fiskars Oyj reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TYSON FOODS and Fiskars Oyj

The main advantage of trading using opposite TYSON FOODS and Fiskars Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TYSON FOODS position performs unexpectedly, Fiskars Oyj 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 Fiskars Oyj will offset losses from the drop in Fiskars Oyj's long position.

The idea behind TYSON FOODS A and Fiskars Oyj Abp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.