Correlation Between ScanSource and Tyson Foods

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

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

Diversification Opportunities for ScanSource and Tyson Foods

-0.75

Correlation Coefficient

ScanSource  Tyson Foods

Pay attention - limited upside

The 3 months correlation between ScanSource and Tyson is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and Tyson Foods go up and down completely randomly.

Pair Corralation between ScanSource and Tyson Foods

Given the investment horizon of 90 days ScanSource is expected to generate 1.23 times more return on investment than Tyson Foods. However, ScanSource is 1.23 times more volatile than Tyson Foods. It trades about 0.21 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.13 per unit of risk. If you would invest  3,299  in ScanSource on April 30, 2025 and sell it today you would earn a total of  814.00  from holding ScanSource or generate 24.67% return on investment over 90 days.

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

ScanSource  vs.  Tyson Foods

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ScanSource exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tyson Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ScanSource and Tyson Foods

The main advantage of trading using opposite ScanSource and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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 ScanSource 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.