Correlation Between Tyson Foods and Global Engine

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

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

Diversification Opportunities for Tyson Foods and Global Engine

-0.08

Correlation Coefficient

Tyson Foods  Global Engine

Good diversification

The 3 months correlation between Tyson and Global is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Global Engine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Engine Group 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 Global Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Engine Group has no effect on the direction of Tyson Foods i.e., Tyson Foods and Global Engine go up and down completely randomly.

Pair Corralation between Tyson Foods and Global Engine

Considering the 90-day investment horizon Tyson Foods is expected to generate 7.89 times less return on investment than Global Engine. But when comparing it to its historical volatility, Tyson Foods is 6.65 times less risky than Global Engine. It trades about 0.06 of its potential returns per unit of risk. Global Engine Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Global Engine Group on December 26, 2024 and sell it today you would earn a total of  22.00  from holding Global Engine Group or generate 14.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tyson Foods  vs.  Global Engine Group

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. 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.

Global Engine Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Engine Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Global Engine exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and Global Engine

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

The idea behind Tyson Foods and Global Engine 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.