Correlation Between Tyson Foods and SNDL

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

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

Diversification Opportunities for Tyson Foods and SNDL

-0.3

Correlation Coefficient

Tyson Foods  SNDL

Very good diversification

The 3 months correlation between Tyson and SNDL is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Tyson Foods i.e., Tyson Foods and SNDL go up and down completely randomly.

Pair Corralation between Tyson Foods and SNDL

Considering the 90-day investment horizon Tyson Foods is expected to generate 6.84 times less return on investment than SNDL. But when comparing it to its historical volatility, Tyson Foods is 2.65 times less risky than SNDL. It trades about 0.01 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  207.00  in SNDL Inc on September 22, 2024 and sell it today you would lose (27.00) from holding SNDL Inc or give up 13.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Tyson Foods  vs.  SNDL Inc

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.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Tyson Foods and SNDL

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

The idea behind Tyson Foods and SNDL Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.