Correlation Between Central Garden and Seneca Foods
Can any of the company-specific risk be diversified away by investing in both Central Garden and Seneca 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 Central Garden and Seneca Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and Seneca Foods Corp, you can compare the effects of market volatilities on Central Garden and Seneca 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 Central Garden with a short position of Seneca Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and Seneca Foods.
Diversification Opportunities for Central Garden and Seneca Foods
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Central and Seneca is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp and Central Garden 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 Central Garden Pet are associated (or correlated) with Seneca Foods. 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 Corp has no effect on the direction of Central Garden i.e., Central Garden and Seneca Foods go up and down completely randomly.
Pair Corralation between Central Garden and Seneca Foods
Assuming the 90 days horizon Central Garden Pet is expected to under-perform the Seneca Foods. But the stock apears to be less risky and, when comparing its historical volatility, Central Garden Pet is 129.61 times less risky than Seneca Foods. The stock trades about -0.07 of its potential returns per unit of risk. The Seneca Foods Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,182 in Seneca Foods Corp on August 24, 2024 and sell it today you would earn a total of 944.00 from holding Seneca Foods Corp or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 46.4% |
| Values | Daily Returns |
Central Garden Pet vs. Seneca Foods Corp
Performance |
| Timeline |
| Central Garden Pet |
| Seneca Foods Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Central Garden and Seneca Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and Seneca Foods
The main advantage of trading using opposite Central Garden and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, Seneca 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 Seneca Foods will offset losses from the drop in Seneca Foods' long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. John B Sanfilippo |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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