Correlation Between Tyson Foods and ChampionX

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

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

Diversification Opportunities for Tyson Foods and ChampionX

-0.04

Correlation Coefficient

Tyson Foods  ChampionX

Good diversification

The 3 months correlation between Tyson and ChampionX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Tyson Foods i.e., Tyson Foods and ChampionX go up and down completely randomly.

Pair Corralation between Tyson Foods and ChampionX

Considering the 90-day investment horizon Tyson Foods is expected to generate 32.25 times less return on investment than ChampionX. But when comparing it to its historical volatility, Tyson Foods is 1.34 times less risky than ChampionX. It trades about 0.0 of its potential returns per unit of risk. ChampionX is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,984  in ChampionX on August 31, 2024 and sell it today you would earn a total of  86.00  from holding ChampionX or generate 2.88% return on investment over 90 days.

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

Tyson Foods  vs.  ChampionX

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. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ChampionX

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and ChampionX

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

The idea behind Tyson Foods and ChampionX 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.