Correlation Between Lerøy Seafood and Tyson Foods

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

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

Diversification Opportunities for Lerøy Seafood and Tyson Foods

0.24

Correlation Coefficient

Lerøy Seafood  Tyson Foods

Modest diversification

The 3 months correlation between Lerøy and Tyson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood Group and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Lerøy Seafood 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 Lery Seafood Group 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 Lerøy Seafood i.e., Lerøy Seafood and Tyson Foods go up and down completely randomly.

Pair Corralation between Lerøy Seafood and Tyson Foods

Assuming the 90 days horizon Lerøy Seafood is expected to generate 1.28 times less return on investment than Tyson Foods. In addition to that, Lerøy Seafood is 1.07 times more volatile than Tyson Foods. It trades about 0.02 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.02 per unit of volatility. If you would invest  5,391  in Tyson Foods on October 24, 2024 and sell it today you would earn a total of  67.00  from holding Tyson Foods or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Lery Seafood Group  vs.  Tyson Foods

Lery Seafood Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lery Seafood Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lerøy Seafood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tyson Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 1 (%) 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 Lerøy Seafood and Tyson Foods

The main advantage of trading using opposite Lerøy Seafood and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood 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 Lery Seafood Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.