Correlation Between 83001WAC8 and Tyson Foods

Can any of the company-specific risk be diversified away by investing in both 83001WAC8 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 83001WAC8 and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Six Flags Theme and Tyson Foods, you can compare the effects of market volatilities on 83001WAC8 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 83001WAC8 with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of 83001WAC8 and Tyson Foods.

Diversification Opportunities for 83001WAC8 and Tyson Foods

-0.05

Correlation Coefficient

83001WAC8  Tyson Foods

Good diversification

The 3 months correlation between 83001WAC8 and Tyson is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Six Flags Theme and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and 83001WAC8 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 Six Flags Theme 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 83001WAC8 i.e., 83001WAC8 and Tyson Foods go up and down completely randomly.

Pair Corralation between 83001WAC8 and Tyson Foods

Assuming the 90 days trading horizon Six Flags Theme is expected to generate 0.26 times more return on investment than Tyson Foods. However, Six Flags Theme is 3.78 times less risky than Tyson Foods. It trades about 0.26 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.01 per unit of risk. If you would invest  10,006  in Six Flags Theme on September 21, 2024 and sell it today you would earn a total of  166.00  from holding Six Flags Theme or generate 1.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	41.86%
Values	Daily Returns

Six Flags Theme  vs.  Tyson Foods

Six Flags Theme

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Flags Theme are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 83001WAC8 is not utilizing all of its potentials. The recent 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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 83001WAC8 and Tyson Foods

The main advantage of trading using opposite 83001WAC8 and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 83001WAC8 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 Six Flags Theme 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.