Correlation Between KROGER and Tyson Foods

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

By analyzing existing cross correlation between KROGER 75 percent and Tyson Foods, you can compare the effects of market volatilities on KROGER 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 KROGER with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of KROGER and Tyson Foods.

Diversification Opportunities for KROGER and Tyson Foods

0.0

Correlation Coefficient

KROGER  Tyson Foods

Pay attention - limited upside

The 3 months correlation between KROGER and Tyson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding KROGER 75 percent and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and KROGER 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 KROGER 75 percent 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 KROGER i.e., KROGER and Tyson Foods go up and down completely randomly.

Pair Corralation between KROGER and Tyson Foods

If you would invest  5,727  in Tyson Foods on December 24, 2024 and sell it today you would earn a total of  316.00  from holding Tyson Foods or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

KROGER 75 percent  vs.  Tyson Foods

KROGER 75 percent

Risk-Adjusted Performance

Weak

Over the last 90 days KROGER 75 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KROGER 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

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with KROGER and Tyson Foods

The main advantage of trading using opposite KROGER and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KROGER 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 KROGER 75 percent 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..