Correlation Between Tyson Foods and Citigroup

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

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

Diversification Opportunities for Tyson Foods and Citigroup

-0.7

Correlation Coefficient

Tyson Foods  Citigroup

Excellent diversification

The 3 months correlation between Tyson and Citigroup is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Tyson Foods i.e., Tyson Foods and Citigroup go up and down completely randomly.

Pair Corralation between Tyson Foods and Citigroup

Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Citigroup. But the stock apears to be less risky and, when comparing its historical volatility, Tyson Foods is 1.11 times less risky than Citigroup. The stock trades about -0.1 of its potential returns per unit of risk. The Citigroup is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,147  in Citigroup on December 4, 2024 and sell it today you would earn a total of  594.00  from holding Citigroup or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Tyson Foods  vs.  Citigroup

Tyson Foods

Risk-Adjusted Performance

Very Weak

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

Citigroup

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tyson Foods and Citigroup

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

The idea behind Tyson Foods and Citigroup 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.