Correlation Between Coor Service and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Coor Service 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 Coor Service 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 Coor Service Management and SENECA FOODS A, you can compare the effects of market volatilities on Coor Service 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 Coor Service with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coor Service and SENECA FOODS-A.
Diversification Opportunities for Coor Service and SENECA FOODS-A
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coor and SENECA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management 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 Coor Service 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 Coor Service Management 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 Coor Service i.e., Coor Service and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Coor Service and SENECA FOODS-A
Assuming the 90 days horizon Coor Service Management is expected to under-perform the SENECA FOODS-A. But the stock apears to be less risky and, when comparing its historical volatility, Coor Service Management is 1.46 times less risky than SENECA FOODS-A. The stock trades about -0.25 of its potential returns per unit of risk. The SENECA FOODS A is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 5,550 in SENECA FOODS A on August 28, 2024 and sell it today you would earn a total of 1,200 from holding SENECA FOODS A or generate 21.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coor Service Management vs. SENECA FOODS A
Performance |
| Timeline |
| Coor Service Management |
| SENECA FOODS A |
Coor Service and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coor Service and SENECA FOODS-A
The main advantage of trading using opposite Coor Service and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service 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.The idea behind Coor Service Management and SENECA FOODS A 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.| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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