Correlation Between Tyson Foods and Pond Technologies

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

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

Diversification Opportunities for Tyson Foods and Pond Technologies

-0.4

Correlation Coefficient

Tyson Foods  Pond Technologies

Very good diversification

The 3 months correlation between Tyson and Pond is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Pond Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pond Technologies 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 Pond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pond Technologies has no effect on the direction of Tyson Foods i.e., Tyson Foods and Pond Technologies go up and down completely randomly.

Pair Corralation between Tyson Foods and Pond Technologies

Considering the 90-day investment horizon Tyson Foods is expected to generate 0.08 times more return on investment than Pond Technologies. However, Tyson Foods is 11.83 times less risky than Pond Technologies. It trades about -0.66 of its potential returns per unit of risk. Pond Technologies Holdings is currently generating about -0.08 per unit of risk. If you would invest  6,264  in Tyson Foods on October 10, 2024 and sell it today you would lose (718.00) from holding Tyson Foods or give up 11.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Tyson Foods  vs.  Pond Technologies Holdings

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.

Pond Technologies

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and Pond Technologies

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

The idea behind Tyson Foods and Pond Technologies Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.