Correlation Between Dow Jones and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones 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 Dow Jones Industrial and SENECA FOODS A, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SENECA FOODS-A.
Diversification Opportunities for Dow Jones and SENECA FOODS-A
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and SENECA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Dow Jones and SENECA FOODS-A
Assuming the 90 days trading horizon Dow Jones is expected to generate 3.72 times less return on investment than SENECA FOODS-A. But when comparing it to its historical volatility, Dow Jones Industrial is 2.77 times less risky than SENECA FOODS-A. It trades about 0.26 of its potential returns per unit of risk. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. SENECA FOODS A
Performance |
| Timeline |
Dow Jones and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SENECA FOODS A
Pair trading matchups for SENECA FOODS-A
Pair Trading with Dow Jones and SENECA FOODS-A
The main advantage of trading using opposite Dow Jones and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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