Correlation Between TYSON FOODS and MAG SILVER

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

Diversification Opportunities for TYSON FOODS and MAG SILVER

-0.16

Correlation Coefficient

TYSON FOODS  MAG SILVER

Good diversification

The 3 months correlation between TYSON and MAG is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding TYSON FOODS A and MAG SILVER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG SILVER 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 MAG SILVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG SILVER has no effect on the direction of TYSON FOODS i.e., TYSON FOODS and MAG SILVER go up and down completely randomly.

Pair Corralation between TYSON FOODS and MAG SILVER

Assuming the 90 days trading horizon TYSON FOODS is expected to generate 11.16 times less return on investment than MAG SILVER. But when comparing it to its historical volatility, TYSON FOODS A is 1.62 times less risky than MAG SILVER. It trades about 0.0 of its potential returns per unit of risk. MAG SILVER is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,283  in MAG SILVER on October 25, 2024 and sell it today you would earn a total of  162.00  from holding MAG SILVER or generate 12.63% return on investment over 90 days.

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

TYSON FOODS A   vs.  MAG SILVER

TYSON FOODS A

Risk-Adjusted Performance

0 of 100

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.

MAG SILVER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAG SILVER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TYSON FOODS and MAG SILVER

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

The idea behind TYSON FOODS A and MAG SILVER 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.