Correlation Between Tyson Foods and Expand Energy

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

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

Diversification Opportunities for Tyson Foods and Expand Energy

0.57

Correlation Coefficient

Tyson Foods  Expand Energy

Very weak diversification

The 3 months correlation between Tyson and Expand is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Tyson Foods i.e., Tyson Foods and Expand Energy go up and down completely randomly.

Pair Corralation between Tyson Foods and Expand Energy

Considering the 90-day investment horizon Tyson Foods is expected to generate 107.75 times less return on investment than Expand Energy. But when comparing it to its historical volatility, Tyson Foods is 1.25 times less risky than Expand Energy. It trades about 0.0 of its potential returns per unit of risk. Expand Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  7,262  in Expand Energy on September 14, 2024 and sell it today you would earn a total of  2,698  from holding Expand Energy or generate 37.15% return on investment over 90 days.

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

Tyson Foods  vs.  Expand Energy

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.

Expand Energy

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Expand Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and Expand Energy

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

The idea behind Tyson Foods and Expand Energy 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.