Correlation Between Tyson Foods and Beyond Meat

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

By analyzing existing cross correlation between Tyson Foods and Beyond Meat, you can compare the effects of market volatilities on Tyson Foods and Beyond Meat 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 Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and Beyond Meat.

Diversification Opportunities for Tyson Foods and Beyond Meat

0.66

Correlation Coefficient

Tyson Foods  Beyond Meat

Poor diversification

The 3 months correlation between Tyson and Beyond is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Tyson Foods i.e., Tyson Foods and Beyond Meat go up and down completely randomly.

Pair Corralation between Tyson Foods and Beyond Meat

Assuming the 90 days trading horizon Tyson Foods is expected to generate 0.49 times more return on investment than Beyond Meat. However, Tyson Foods is 2.03 times less risky than Beyond Meat. It trades about 0.01 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.08 per unit of risk. If you would invest  5,493  in Tyson Foods on November 19, 2024 and sell it today you would lose (13.00) from holding Tyson Foods or give up 0.24% of portfolio value over 90 days.

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

Tyson Foods  vs.  Beyond Meat

Tyson Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Beyond Meat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Tyson Foods and Beyond Meat

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

The idea behind Tyson Foods and Beyond Meat 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.