Correlation Between Pilgrims Pride and Tate Lyle

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

By analyzing existing cross correlation between Pilgrims Pride Corp and Tate Lyle plc, you can compare the effects of market volatilities on Pilgrims Pride and Tate Lyle 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 Pilgrims Pride with a short position of Tate Lyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilgrims Pride and Tate Lyle.

Diversification Opportunities for Pilgrims Pride and Tate Lyle

-0.29

Correlation Coefficient

Pilgrims Pride  Tate Lyle

Very good diversification

The 3 months correlation between Pilgrims and Tate is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and Tate Lyle plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tate Lyle plc and Pilgrims Pride 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 Pilgrims Pride Corp are associated (or correlated) with Tate Lyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tate Lyle plc has no effect on the direction of Pilgrims Pride i.e., Pilgrims Pride and Tate Lyle go up and down completely randomly.

Pair Corralation between Pilgrims Pride and Tate Lyle

If you would invest  3,508  in Pilgrims Pride Corp on February 5, 2024 and sell it today you would earn a total of  120.00  from holding Pilgrims Pride Corp or generate 3.42% return on investment over 90 days.

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

Pilgrims Pride Corp  vs.  Tate Lyle plc

Pilgrims Pride Corp

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pilgrims Pride exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tate Lyle plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tate Lyle plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tate Lyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pilgrims Pride and Tate Lyle

The main advantage of trading using opposite Pilgrims Pride and Tate Lyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilgrims Pride position performs unexpectedly, Tate Lyle 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 Tate Lyle will offset losses from the drop in Tate Lyle's long position.

The idea behind Pilgrims Pride Corp and Tate Lyle plc 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 Correlations module to find global opportunities by holding instruments from different markets.