Correlation Between Tyson Foods and Biogen

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

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

Diversification Opportunities for Tyson Foods and Biogen

-0.28

Correlation Coefficient

Tyson Foods  Biogen

Very good diversification

The 3 months correlation between Tyson and Biogen is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Tyson Foods i.e., Tyson Foods and Biogen go up and down completely randomly.

Pair Corralation between Tyson Foods and Biogen

Assuming the 90 days trading horizon Tyson Foods is expected to generate 1.09 times more return on investment than Biogen. However, Tyson Foods is 1.09 times more volatile than Biogen Inc. It trades about 0.01 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.2 per unit of risk. If you would invest  33,558  in Tyson Foods on October 24, 2024 and sell it today you would lose (110.00) from holding Tyson Foods or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.22%
Values	Daily Returns

Tyson Foods  vs.  Biogen Inc

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. Despite somewhat strong basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tyson Foods and Biogen

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

The idea behind Tyson Foods and Biogen Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.