Correlation Between Tyson Foods and Espey Mfg

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

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

Diversification Opportunities for Tyson Foods and Espey Mfg

0.15

Correlation Coefficient

Tyson Foods  Espey Mfg

Average diversification

The 3 months correlation between Tyson and Espey is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics 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 Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Tyson Foods i.e., Tyson Foods and Espey Mfg go up and down completely randomly.

Pair Corralation between Tyson Foods and Espey Mfg

Considering the 90-day investment horizon Tyson Foods is expected to generate 0.92 times more return on investment than Espey Mfg. However, Tyson Foods is 1.09 times less risky than Espey Mfg. It trades about 0.08 of its potential returns per unit of risk. Espey Mfg Electronics is currently generating about -0.48 per unit of risk. If you would invest  5,770  in Tyson Foods on January 20, 2024 and sell it today you would earn a total of  117.00  from holding Tyson Foods or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tyson Foods  vs.  Espey Mfg Electronics

Tyson Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Tyson Foods displayed solid returns over the last few months and may actually be approaching a breakup point.

Espey Mfg Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Espey Mfg Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Espey Mfg is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tyson Foods and Espey Mfg

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

The idea behind Tyson Foods and Espey Mfg Electronics 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 Stocks Directory module to find actively traded stocks across global markets.