Correlation Between TYSON FOODS and Ally Financial

Can any of the company-specific risk be diversified away by investing in both TYSON FOODS and Ally Financial 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 Ally Financial 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 Ally Financial, you can compare the effects of market volatilities on TYSON FOODS and Ally Financial 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYSON FOODS and Ally Financial.

Diversification Opportunities for TYSON FOODS and Ally Financial

-0.44

Correlation Coefficient

TYSON FOODS  Ally Financial

Very good diversification

The 3 months correlation between TYSON and Ally is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and Ally Financial go up and down completely randomly.

Pair Corralation between TYSON FOODS and Ally Financial

Assuming the 90 days trading horizon TYSON FOODS A is expected to generate 0.64 times more return on investment than Ally Financial. However, TYSON FOODS A is 1.56 times less risky than Ally Financial. It trades about 0.0 of its potential returns per unit of risk. Ally Financial is currently generating about -0.02 per unit of risk. If you would invest  5,531  in TYSON FOODS A on December 20, 2024 and sell it today you would lose (14.00) from holding TYSON FOODS A or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

TYSON FOODS A   vs.  Ally Financial

TYSON FOODS A

Risk-Adjusted Performance

Very Weak

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 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.

Ally Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ally Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ally Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TYSON FOODS and Ally Financial

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

The idea behind TYSON FOODS A and Ally Financial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.