Correlation Between Tyson Foods and Adecoagro

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

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

Diversification Opportunities for Tyson Foods and Adecoagro

-0.35

Correlation Coefficient

Tyson Foods  Adecoagro

Very good diversification

The 3 months correlation between Tyson and Adecoagro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA 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 Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Tyson Foods i.e., Tyson Foods and Adecoagro go up and down completely randomly.

Pair Corralation between Tyson Foods and Adecoagro

Considering the 90-day investment horizon Tyson Foods is expected to generate 1.18 times less return on investment than Adecoagro. But when comparing it to its historical volatility, Tyson Foods is 1.12 times less risky than Adecoagro. It trades about 0.01 of its potential returns per unit of risk. Adecoagro SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,087  in Adecoagro SA on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Adecoagro SA or generate 0.28% return on investment over 90 days.

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

Tyson Foods  vs.  Adecoagro SA

Tyson Foods

Risk-Adjusted Performance

0 of 100

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 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.

Adecoagro SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecoagro SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adecoagro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tyson Foods and Adecoagro

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

The idea behind Tyson Foods and Adecoagro SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.