Correlation Between Tyson Foods and SEI Investments

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

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

Diversification Opportunities for Tyson Foods and SEI Investments

0.6

Correlation Coefficient

Tyson Foods  SEI Investments

Poor diversification

The 3 months correlation between Tyson and SEI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Tyson Foods i.e., Tyson Foods and SEI Investments go up and down completely randomly.

Pair Corralation between Tyson Foods and SEI Investments

Considering the 90-day investment horizon Tyson Foods is expected to generate 19.39 times less return on investment than SEI Investments. But when comparing it to its historical volatility, Tyson Foods is 1.08 times less risky than SEI Investments. It trades about 0.01 of its potential returns per unit of risk. SEI Investments is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,855  in SEI Investments on September 25, 2024 and sell it today you would earn a total of  1,590  from holding SEI Investments or generate 23.19% return on investment over 90 days.

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

Tyson Foods  vs.  SEI Investments

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.

SEI Investments

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and SEI Investments

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

The idea behind Tyson Foods and SEI Investments 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.