Correlation Between Plastic Omnium and TYSON FOODS

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

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

Diversification Opportunities for Plastic Omnium and TYSON FOODS

-0.16

Correlation Coefficient

Plastic Omnium  TYSON FOODS

Good diversification

The 3 months correlation between Plastic and TYSON is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and TYSON FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TYSON FOODS A and Plastic Omnium 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 Plastic Omnium 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 A has no effect on the direction of Plastic Omnium i.e., Plastic Omnium and TYSON FOODS go up and down completely randomly.

Pair Corralation between Plastic Omnium and TYSON FOODS

Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.88 times more return on investment than TYSON FOODS. However, Plastic Omnium is 1.88 times more volatile than TYSON FOODS A . It trades about 0.12 of its potential returns per unit of risk. TYSON FOODS A is currently generating about 0.07 per unit of risk. If you would invest  808.00  in Plastic Omnium on September 12, 2024 and sell it today you would earn a total of  178.00  from holding Plastic Omnium or generate 22.03% return on investment over 90 days.

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

Plastic Omnium  vs.  TYSON FOODS A

Plastic Omnium

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plastic Omnium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plastic Omnium unveiled solid returns over the last few months and may actually be approaching a breakup point.

TYSON FOODS A

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TYSON FOODS A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, TYSON FOODS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Plastic Omnium and TYSON FOODS

The main advantage of trading using opposite Plastic Omnium and TYSON FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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's long position.

The idea behind Plastic Omnium and TYSON FOODS A 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 Transaction History module to view history of all your transactions and understand their impact on performance.