Correlation Between Clean Seas and Tyson Foods

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

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

Diversification Opportunities for Clean Seas and Tyson Foods

0.22

Correlation Coefficient

Clean Seas  Tyson Foods

Modest diversification

The 3 months correlation between Clean and Tyson is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Clean Seas 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 Clean Seas Seafood 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 Clean Seas i.e., Clean Seas and Tyson Foods go up and down completely randomly.

Pair Corralation between Clean Seas and Tyson Foods

Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Tyson Foods. In addition to that, Clean Seas is 4.99 times more volatile than Tyson Foods. It trades about -0.13 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.01 per unit of volatility. If you would invest  5,751  in Tyson Foods on September 25, 2024 and sell it today you would earn a total of  32.00  from holding Tyson Foods or generate 0.56% return on investment over 90 days.

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

Clean Seas Seafood  vs.  Tyson Foods

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company 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. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Clean Seas and Tyson Foods

The main advantage of trading using opposite Clean Seas and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Seas 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 Clean Seas Seafood 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..