Correlation Between Tyson Foods and Edible Garden

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

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

Diversification Opportunities for Tyson Foods and Edible Garden

-0.2

Correlation Coefficient

Tyson Foods  Edible Garden

Good diversification

The 3 months correlation between Tyson and Edible is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Edible Garden AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edible Garden AG 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 Edible Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edible Garden AG has no effect on the direction of Tyson Foods i.e., Tyson Foods and Edible Garden go up and down completely randomly.

Pair Corralation between Tyson Foods and Edible Garden

Considering the 90-day investment horizon Tyson Foods is expected to generate 14.55 times less return on investment than Edible Garden. But when comparing it to its historical volatility, Tyson Foods is 10.82 times less risky than Edible Garden. It trades about 0.01 of its potential returns per unit of risk. Edible Garden AG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Edible Garden AG on September 25, 2024 and sell it today you would lose (15.00) from holding Edible Garden AG or give up 29.41% of portfolio value over 90 days.

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

Tyson Foods  vs.  Edible Garden AG

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.

Edible Garden AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and Edible Garden

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

The idea behind Tyson Foods and Edible Garden AG 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.