Correlation Between Tyson Foods and Weyco

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

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

Diversification Opportunities for Tyson Foods and Weyco

0.4

Correlation Coefficient

Tyson Foods  Weyco

Very weak diversification

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

Pair Corralation between Tyson Foods and Weyco

Considering the 90-day investment horizon Tyson Foods is expected to generate 16.22 times less return on investment than Weyco. But when comparing it to its historical volatility, Tyson Foods is 1.4 times less risky than Weyco. It trades about 0.01 of its potential returns per unit of risk. Weyco Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,024  in Weyco Group on September 21, 2024 and sell it today you would earn a total of  1,593  from holding Weyco Group or generate 78.71% return on investment over 90 days.

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

Tyson Foods  vs.  Weyco Group

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.

Weyco Group

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tyson Foods and Weyco

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

The idea behind Tyson Foods and Weyco 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.