Correlation Between Tyson Foods and Baumer SA

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

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

Diversification Opportunities for Tyson Foods and Baumer SA

-0.53

Correlation Coefficient

Tyson Foods  Baumer SA

Excellent diversification

The 3 months correlation between Tyson and Baumer is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA 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 Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of Tyson Foods i.e., Tyson Foods and Baumer SA go up and down completely randomly.

Pair Corralation between Tyson Foods and Baumer SA

Assuming the 90 days trading horizon Tyson Foods is expected to generate 0.4 times more return on investment than Baumer SA. However, Tyson Foods is 2.48 times less risky than Baumer SA. It trades about 0.12 of its potential returns per unit of risk. Baumer SA is currently generating about 0.02 per unit of risk. If you would invest  34,380  in Tyson Foods on September 13, 2024 and sell it today you would earn a total of  4,074  from holding Tyson Foods or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Tyson Foods  vs.  Baumer SA

Tyson Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tyson Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Baumer SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Baumer SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tyson Foods and Baumer SA

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

The idea behind Tyson Foods and Baumer SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.