Correlation Between Tyson Foods and Gen Digital

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

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

Diversification Opportunities for Tyson Foods and Gen Digital

0.38

Correlation Coefficient

Tyson Foods  Gen Digital

Weak diversification

The 3 months correlation between Tyson and Gen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Tyson Foods i.e., Tyson Foods and Gen Digital go up and down completely randomly.

Pair Corralation between Tyson Foods and Gen Digital

Assuming the 90 days trading horizon Tyson Foods is expected to generate 2.16 times more return on investment than Gen Digital. However, Tyson Foods is 2.16 times more volatile than Gen Digital. It trades about -0.03 of its potential returns per unit of risk. Gen Digital is currently generating about -0.12 per unit of risk. If you would invest  35,742  in Tyson Foods on December 22, 2024 and sell it today you would lose (966.00) from holding Tyson Foods or give up 2.7% of portfolio value over 90 days.

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

Tyson Foods  vs.  Gen Digital

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.

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Gen Digital 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 Gen Digital

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

The idea behind Tyson Foods and Gen Digital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.