Correlation Between Tyson Foods and Enersys

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

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

Diversification Opportunities for Tyson Foods and Enersys

-0.27

Correlation Coefficient

Tyson Foods  Enersys

Very good diversification

The 3 months correlation between Tyson and Enersys is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Tyson Foods i.e., Tyson Foods and Enersys go up and down completely randomly.

Pair Corralation between Tyson Foods and Enersys

Considering the 90-day investment horizon Tyson Foods is expected to generate 0.78 times more return on investment than Enersys. However, Tyson Foods is 1.28 times less risky than Enersys. It trades about 0.02 of its potential returns per unit of risk. Enersys is currently generating about -0.05 per unit of risk. If you would invest  5,638  in Tyson Foods on September 28, 2024 and sell it today you would earn a total of  159.00  from holding Tyson Foods or generate 2.82% 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.  Enersys

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 current stock price disarray, may contribute to short-term losses for the investors.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Tyson Foods and Enersys

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

The idea behind Tyson Foods and Enersys 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.