Correlation Between Major Drilling and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Major Drilling and SENECA FOODS-A 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 Major Drilling and SENECA FOODS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and SENECA FOODS A, you can compare the effects of market volatilities on Major Drilling and SENECA FOODS-A 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 Major Drilling with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and SENECA FOODS-A.
Diversification Opportunities for Major Drilling and SENECA FOODS-A
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Major and SENECA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A and Major Drilling 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 Major Drilling Group are associated (or correlated) with SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of Major Drilling i.e., Major Drilling and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Major Drilling and SENECA FOODS-A
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the SENECA FOODS-A. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.33 times less risky than SENECA FOODS-A. The stock trades about -0.02 of its potential returns per unit of risk. The SENECA FOODS A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,450 in SENECA FOODS A on October 11, 2024 and sell it today you would earn a total of 1,600 from holding SENECA FOODS A or generate 29.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Major Drilling Group vs. SENECA FOODS A
Performance |
| Timeline |
| Major Drilling Group |
| SENECA FOODS A |
Major Drilling and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and SENECA FOODS-A
The main advantage of trading using opposite Major Drilling and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.| Major Drilling vs. GRUPO CARSO A1 | Major Drilling vs. Treasury Wine Estates | Major Drilling vs. CHINA TONTINE WINES | Major Drilling vs. SPORT LISBOA E |
| SENECA FOODS-A vs. Commonwealth Bank of | SENECA FOODS-A vs. Perdoceo Education | SENECA FOODS-A vs. Major Drilling Group | SENECA FOODS-A vs. American Public Education |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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