Correlation Between Simon Property and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both Simon Property and Tyson Foods 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 Simon Property and Tyson Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Tyson Foods, you can compare the effects of market volatilities on Simon Property and Tyson Foods 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 Simon Property with a short position of Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Tyson Foods.
Diversification Opportunities for Simon Property and Tyson Foods
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simon and Tyson is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods and Simon Property 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 Simon Property Group are associated (or correlated) with Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Simon Property i.e., Simon Property and Tyson Foods go up and down completely randomly.
Pair Corralation between Simon Property and Tyson Foods
Considering the 90-day investment horizon Simon Property Group is expected to generate 1.04 times more return on investment than Tyson Foods. However, Simon Property is 1.04 times more volatile than Tyson Foods. It trades about 0.05 of its potential returns per unit of risk. Tyson Foods is currently generating about -0.03 per unit of risk. If you would invest 10,225 in Simon Property Group on February 1, 2024 and sell it today you would earn a total of 3,793 from holding Simon Property Group or generate 37.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Simon Property Group vs. Tyson Foods
Performance |
Timeline |
Simon Property Group |
Tyson Foods |
Simon Property and Tyson Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Simon Property and Tyson Foods
The main advantage of trading using opposite Simon Property and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Tyson Foods 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 Tyson Foods will offset losses from the drop in Tyson Foods' long position.Simon Property vs. Urban Edge Properties | Simon Property vs. Morningstar Unconstrained Allocation | Simon Property vs. SPACE |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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