Correlation Between Tyson Foods and BURLINGTON STORES

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

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

Diversification Opportunities for Tyson Foods and BURLINGTON STORES

0.81

Correlation Coefficient

Tyson Foods  BURLINGTON STORES

Very poor diversification

The 3 months correlation between Tyson and BURLINGTON is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and BURLINGTON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BURLINGTON STORES 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 BURLINGTON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BURLINGTON STORES has no effect on the direction of Tyson Foods i.e., Tyson Foods and BURLINGTON STORES go up and down completely randomly.

Pair Corralation between Tyson Foods and BURLINGTON STORES

Assuming the 90 days trading horizon Tyson Foods is expected to generate 4.62 times less return on investment than BURLINGTON STORES. But when comparing it to its historical volatility, Tyson Foods is 1.46 times less risky than BURLINGTON STORES. It trades about 0.01 of its potential returns per unit of risk. BURLINGTON STORES is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  19,000  in BURLINGTON STORES on September 23, 2024 and sell it today you would earn a total of  8,000  from holding BURLINGTON STORES or generate 42.11% return on investment over 90 days.

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

Tyson Foods  vs.  BURLINGTON STORES

Tyson Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 3 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BURLINGTON STORES

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, BURLINGTON STORES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tyson Foods and BURLINGTON STORES

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

The idea behind Tyson Foods and BURLINGTON STORES 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.