Correlation Between Tyson Foods and Sysco

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

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

Diversification Opportunities for Tyson Foods and Sysco

0.4

Correlation Coefficient

Tyson Foods  Sysco

Very weak diversification

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

Pair Corralation between Tyson Foods and Sysco

Considering the 90-day investment horizon Tyson Foods is expected to under-perform the Sysco. In addition to that, Tyson Foods is 1.35 times more volatile than Sysco. It trades about -0.01 of its total potential returns per unit of risk. Sysco is currently generating about 0.01 per unit of volatility. If you would invest  7,504  in Sysco on October 12, 2024 and sell it today you would lose (19.00) from holding Sysco or give up 0.25% of portfolio value over 90 days.

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

Tyson Foods  vs.  Sysco

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 latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sysco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and Sysco

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

The idea behind Tyson Foods and Sysco 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.