Correlation Between Tyson Foods and JM Smucker
Can any of the company-specific risk be diversified away by investing in both Tyson Foods and JM Smucker 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 JM Smucker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and JM Smucker, you can compare the effects of market volatilities on Tyson Foods and JM Smucker 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 JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and JM Smucker.
Diversification Opportunities for Tyson Foods and JM Smucker
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tyson and SJM is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Tyson Foods i.e., Tyson Foods and JM Smucker go up and down completely randomly.
Pair Corralation between Tyson Foods and JM Smucker
Considering the 90-day investment horizon Tyson Foods is expected to generate 0.8 times more return on investment than JM Smucker. However, Tyson Foods is 1.25 times less risky than JM Smucker. It trades about 0.2 of its potential returns per unit of risk. JM Smucker is currently generating about -0.1 per unit of risk. If you would invest 5,817 in Tyson Foods on January 26, 2024 and sell it today you would earn a total of 315.00 from holding Tyson Foods or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tyson Foods vs. JM Smucker
Performance |
| Timeline |
| Tyson Foods |
| JM Smucker |
Tyson Foods and JM Smucker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tyson Foods and JM Smucker
The main advantage of trading using opposite Tyson Foods and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker's long position.| Tyson Foods vs. Cal Maine Foods | Tyson Foods vs. Dole PLC | Tyson Foods vs. Adecoagro SA | Tyson Foods vs. Fresh Del Monte |
| JM Smucker vs. ConAgra Foods | JM Smucker vs. Kellanova | JM Smucker vs. General Mills | JM Smucker vs. Hormel Foods |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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