Correlation Between Tyson Foods and Hartford Financial

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

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

Diversification Opportunities for Tyson Foods and Hartford Financial

0.21

Correlation Coefficient

Tyson Foods  Hartford Financial

Modest diversification

The 3 months correlation between Tyson and Hartford is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Tyson Foods i.e., Tyson Foods and Hartford Financial go up and down completely randomly.

Pair Corralation between Tyson Foods and Hartford Financial

Assuming the 90 days trading horizon Tyson Foods is expected to under-perform the Hartford Financial. In addition to that, Tyson Foods is 26.96 times more volatile than The Hartford Financial. It trades about -0.03 of its total potential returns per unit of risk. The Hartford Financial is currently generating about 0.13 per unit of volatility. If you would invest  51,772  in The Hartford Financial on December 25, 2024 and sell it today you would earn a total of  208.00  from holding The Hartford Financial or generate 0.4% return on investment over 90 days.

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

Tyson Foods  vs.  The Hartford Financial

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 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.

The Hartford Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Hartford Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and Hartford Financial

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

The idea behind Tyson Foods and The Hartford Financial 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.