Correlation Between Tyson Foods and Air Products

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

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

Diversification Opportunities for Tyson Foods and Air Products

0.74

Correlation Coefficient

Tyson Foods  Air Products

Poor diversification

The 3 months correlation between Tyson and Air is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Tyson Foods i.e., Tyson Foods and Air Products go up and down completely randomly.

Pair Corralation between Tyson Foods and Air Products

Assuming the 90 days trading horizon Tyson Foods is expected to generate 1.14 times less return on investment than Air Products. In addition to that, Tyson Foods is 1.65 times more volatile than Air Products and. It trades about 0.02 of its total potential returns per unit of risk. Air Products and is currently generating about 0.03 per unit of volatility. If you would invest  37,583  in Air Products and on October 11, 2024 and sell it today you would earn a total of  7,267  from holding Air Products and or generate 19.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.71%
Values	Daily Returns

Tyson Foods  vs.  Air Products and

Tyson Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tyson Foods may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Air Products

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Air Products is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and Air Products

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

The idea behind Tyson Foods and Air Products and 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.