Correlation Between Tyson Foods and Sea

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

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

Diversification Opportunities for Tyson Foods and Sea

0.73

Correlation Coefficient

Tyson Foods  Sea

Poor diversification

The 3 months correlation between Tyson and Sea is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and Tyson Foods 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 Tyson Foods are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Tyson Foods i.e., Tyson Foods and Sea go up and down completely randomly.

Pair Corralation between Tyson Foods and Sea

Considering the 90-day investment horizon Tyson Foods is expected to generate 5.54 times less return on investment than Sea. But when comparing it to its historical volatility, Tyson Foods is 1.8 times less risky than Sea. It trades about 0.09 of its potential returns per unit of risk. Sea is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,361  in Sea on February 7, 2024 and sell it today you would earn a total of  2,248  from holding Sea or generate 51.55% return on investment over 90 days.

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

Tyson Foods  vs.  Sea

Tyson Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Tyson Foods may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Sea

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and Sea

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

The idea behind Tyson Foods and Sea 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.