Correlation Between Tyson Foods and Vienna Insurance

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

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

Diversification Opportunities for Tyson Foods and Vienna Insurance

-0.59

Correlation Coefficient

Tyson Foods  Vienna Insurance

Excellent diversification

The 3 months correlation between Tyson and Vienna is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance 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 Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of Tyson Foods i.e., Tyson Foods and Vienna Insurance go up and down completely randomly.

Pair Corralation between Tyson Foods and Vienna Insurance

Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Vienna Insurance. In addition to that, Tyson Foods is 1.82 times more volatile than Vienna Insurance Group. It trades about -0.1 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.25 per unit of volatility. If you would invest  3,000  in Vienna Insurance Group on October 26, 2024 and sell it today you would earn a total of  120.00  from holding Vienna Insurance Group or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Tyson Foods  vs.  Vienna Insurance Group

Tyson Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vienna Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vienna Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tyson Foods and Vienna Insurance

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

The idea behind Tyson Foods and Vienna Insurance Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.