Correlation Between Tyson Foods and Ardagh

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

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

Diversification Opportunities for Tyson Foods and Ardagh

0.0

Correlation Coefficient

Tyson Foods  Ardagh

Pay attention - limited upside

The 3 months correlation between Tyson and Ardagh is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Ardagh Packaging Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Packaging Finance 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 Ardagh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Packaging Finance has no effect on the direction of Tyson Foods i.e., Tyson Foods and Ardagh go up and down completely randomly.

Pair Corralation between Tyson Foods and Ardagh

Considering the 90-day investment horizon Tyson Foods is expected to under-perform the Ardagh. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 9.86 times less risky than Ardagh. The stock trades about -0.07 of its potential returns per unit of risk. The Ardagh Packaging Finance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,950  in Ardagh Packaging Finance on October 9, 2024 and sell it today you would lose (150.00) from holding Ardagh Packaging Finance or give up 2.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	48.72%
Values	Daily Returns

Tyson Foods  vs.  Ardagh Packaging Finance

Tyson Foods

Risk-Adjusted Performance

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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.

Ardagh Packaging Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardagh Packaging Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Ardagh Packaging Finance investors.

Pair Trading with Tyson Foods and Ardagh

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

The idea behind Tyson Foods and Ardagh Packaging Finance 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..