Correlation Between SENECA FOODS-A and Tyson Foods

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

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

Diversification Opportunities for SENECA FOODS-A and Tyson Foods

0.52

Correlation Coefficient

SENECA FOODS-A  Tyson Foods

Very weak diversification

The 3 months correlation between SENECA and Tyson is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and Tyson Foods go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and Tyson Foods

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.54 times more return on investment than Tyson Foods. However, SENECA FOODS-A is 1.54 times more volatile than Tyson Foods. It trades about 0.13 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.05 per unit of risk. If you would invest  5,250  in SENECA FOODS A on August 31, 2024 and sell it today you would earn a total of  1,250  from holding SENECA FOODS A or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SENECA FOODS A  vs.  Tyson Foods

SENECA FOODS A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SENECA FOODS-A and Tyson Foods

The main advantage of trading using opposite SENECA FOODS-A and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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 SENECA FOODS A 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.