Correlation Between Tyson Foods and Titan International

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

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

Diversification Opportunities for Tyson Foods and Titan International

-0.76

Correlation Coefficient

Tyson Foods  Titan International

Pay attention - limited upside

The 3 months correlation between Tyson and Titan is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International 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 Titan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan International has no effect on the direction of Tyson Foods i.e., Tyson Foods and Titan International go up and down completely randomly.

Pair Corralation between Tyson Foods and Titan International

Considering the 90-day investment horizon Tyson Foods is expected to generate 0.71 times more return on investment than Titan International. However, Tyson Foods is 1.42 times less risky than Titan International. It trades about -0.06 of its potential returns per unit of risk. Titan International is currently generating about -0.49 per unit of risk. If you would invest  5,909  in Tyson Foods on February 7, 2024 and sell it today you would lose (164.00) from holding Tyson Foods or give up 2.78% of portfolio value over 90 days.

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

Tyson Foods  vs.  Titan International

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.

Titan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tyson Foods and Titan International

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

The idea behind Tyson Foods and Titan International 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.