Correlation Between Tyson Foods and Hain Celestial

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

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

Diversification Opportunities for Tyson Foods and Hain Celestial

-0.38

Correlation Coefficient

Tyson Foods  Hain Celestial

Very good diversification

The 3 months correlation between Tyson and Hain is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and The Hain Celestial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hain Celestial 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 Hain Celestial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hain Celestial has no effect on the direction of Tyson Foods i.e., Tyson Foods and Hain Celestial go up and down completely randomly.

Pair Corralation between Tyson Foods and Hain Celestial

Considering the 90-day investment horizon Tyson Foods is expected to generate 3.85 times less return on investment than Hain Celestial. But when comparing it to its historical volatility, Tyson Foods is 2.48 times less risky than Hain Celestial. It trades about 0.01 of its potential returns per unit of risk. The Hain Celestial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  832.00  in The Hain Celestial on September 2, 2024 and sell it today you would lose (5.00) from holding The Hain Celestial or give up 0.6% of portfolio value over 90 days.

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

Tyson Foods  vs.  The Hain Celestial

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.

Hain Celestial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hain Celestial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Hain Celestial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and Hain Celestial

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

The idea behind Tyson Foods and The Hain Celestial 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.