Correlation Between Village Farms and Tyson Foods

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

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

Diversification Opportunities for Village Farms and Tyson Foods

-0.49

Correlation Coefficient

Village Farms  Tyson Foods

Very good diversification

The 3 months correlation between Village and Tyson is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Village Farms International and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Village Farms 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 Village Farms International 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 Village Farms i.e., Village Farms and Tyson Foods go up and down completely randomly.

Pair Corralation between Village Farms and Tyson Foods

Considering the 90-day investment horizon Village Farms International is expected to generate 5.52 times more return on investment than Tyson Foods. However, Village Farms is 5.52 times more volatile than Tyson Foods. It trades about -0.01 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.82 per unit of risk. If you would invest  79.00  in Village Farms International on October 4, 2024 and sell it today you would lose (1.90) from holding Village Farms International or give up 2.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Village Farms International  vs.  Tyson Foods

Village Farms Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Village Farms International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Village Farms and Tyson Foods

The main advantage of trading using opposite Village Farms and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Farms 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 Village Farms International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.