Correlation Between Tyson Foods and NISSIN FOODS

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

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

Diversification Opportunities for Tyson Foods and NISSIN FOODS

-0.48

Correlation Coefficient

Tyson Foods  NISSIN FOODS

Very good diversification

The 3 months correlation between Tyson and NISSIN is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and NISSIN FOODS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSIN FOODS HLDGS 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 NISSIN FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSIN FOODS HLDGS has no effect on the direction of Tyson Foods i.e., Tyson Foods and NISSIN FOODS go up and down completely randomly.

Pair Corralation between Tyson Foods and NISSIN FOODS

Assuming the 90 days trading horizon Tyson Foods is expected to generate 1.17 times more return on investment than NISSIN FOODS. However, Tyson Foods is 1.17 times more volatile than NISSIN FOODS HLDGS. It trades about 0.06 of its potential returns per unit of risk. NISSIN FOODS HLDGS is currently generating about -0.19 per unit of risk. If you would invest  5,474  in Tyson Foods on December 30, 2024 and sell it today you would earn a total of  331.00  from holding Tyson Foods or generate 6.05% return on investment over 90 days.

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

Tyson Foods  vs.  NISSIN FOODS HLDGS

Tyson Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Tyson Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NISSIN FOODS HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NISSIN FOODS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tyson Foods and NISSIN FOODS

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

The idea behind Tyson Foods and NISSIN FOODS HLDGS 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.