Correlation Between FREEPORT and Tyson Foods

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 525 and Tyson Foods, you can compare the effects of market volatilities on FREEPORT and Tyson Foods 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 FREEPORT with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and Tyson Foods.

Diversification Opportunities for FREEPORT and Tyson Foods

0.42

Correlation Coefficient

FREEPORT  Tyson Foods

Very weak diversification

The 3 months correlation between FREEPORT and Tyson is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 525 and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and FREEPORT 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 FREEPORT MCMORAN INC 525 are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of FREEPORT i.e., FREEPORT and Tyson Foods go up and down completely randomly.

Pair Corralation between FREEPORT and Tyson Foods

Assuming the 90 days trading horizon FREEPORT is expected to generate 1.34 times less return on investment than Tyson Foods. But when comparing it to its historical volatility, FREEPORT MCMORAN INC 525 is 2.5 times less risky than Tyson Foods. It trades about 0.0 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6,061  in Tyson Foods on October 4, 2024 and sell it today you would lose (253.00) from holding Tyson Foods or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

FREEPORT MCMORAN INC 525  vs.  Tyson Foods

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FREEPORT and Tyson Foods

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

The idea behind FREEPORT MCMORAN INC 525 and Tyson Foods 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .