Correlation Between Tyson Foods and Uber Technologies

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

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

Diversification Opportunities for Tyson Foods and Uber Technologies

-0.37

Correlation Coefficient

Tyson Foods  Uber Technologies

Very good diversification

The 3 months correlation between Tyson and Uber is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Tyson Foods i.e., Tyson Foods and Uber Technologies go up and down completely randomly.

Pair Corralation between Tyson Foods and Uber Technologies

Assuming the 90 days trading horizon Tyson Foods is expected to generate 4.19 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Tyson Foods is 1.54 times less risky than Uber Technologies. It trades about 0.03 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,105  in Uber Technologies on September 4, 2024 and sell it today you would earn a total of  1,024  from holding Uber Technologies or generate 10.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Tyson Foods  vs.  Uber Technologies

Tyson Foods

Risk-Adjusted Performance

0 of 100

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Uber Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tyson Foods and Uber Technologies

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

The idea behind Tyson Foods and Uber Technologies 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 Anywhere module to track or share privately all of your investments from the convenience of any device.