Correlation Between Tyson Foods and LPL Financial

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

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

Diversification Opportunities for Tyson Foods and LPL Financial

-0.82

Correlation Coefficient

Tyson Foods  LPL Financial

Pay attention - limited upside

The 3 months correlation between Tyson and LPL is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Tyson Foods i.e., Tyson Foods and LPL Financial go up and down completely randomly.

Pair Corralation between Tyson Foods and LPL Financial

Assuming the 90 days trading horizon Tyson Foods is expected to generate 0.64 times more return on investment than LPL Financial. However, Tyson Foods is 1.55 times less risky than LPL Financial. It trades about 0.04 of its potential returns per unit of risk. LPL Financial Holdings is currently generating about -0.18 per unit of risk. If you would invest  31,116  in Tyson Foods on April 5, 2025 and sell it today you would earn a total of  194.00  from holding Tyson Foods or generate 0.62% return on investment over 90 days.

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

Tyson Foods  vs.  LPL Financial Holdings

Tyson Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tyson Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LPL Financial Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tyson Foods and LPL Financial

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

The idea behind Tyson Foods and LPL Financial Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.