Correlation Between Farmer Bros and Seneca Foods
Can any of the company-specific risk be diversified away by investing in both Farmer Bros 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 Farmer Bros and Seneca Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmer Bros Co and Seneca Foods Corp, you can compare the effects of market volatilities on Farmer Bros 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 Farmer Bros with a short position of Seneca Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and Seneca Foods.
Diversification Opportunities for Farmer Bros and Seneca Foods
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmer and Seneca is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co 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 Farmer Bros 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 Farmer Bros Co 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 Farmer Bros i.e., Farmer Bros and Seneca Foods go up and down completely randomly.
Pair Corralation between Farmer Bros and Seneca Foods
Given the investment horizon of 90 days Farmer Bros Co is expected to generate 0.78 times more return on investment than Seneca Foods. However, Farmer Bros Co is 1.29 times less risky than Seneca Foods. It trades about -0.15 of its potential returns per unit of risk. Seneca Foods Corp is currently generating about -0.55 per unit of risk. If you would invest 178.00 in Farmer Bros Co on October 21, 2024 and sell it today you would lose (9.00) from holding Farmer Bros Co or give up 5.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.37% |
| Values | Daily Returns |
Farmer Bros Co vs. Seneca Foods Corp
Performance |
| Timeline |
| Farmer Bros |
| Seneca Foods Corp |
Farmer Bros and Seneca Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmer Bros and Seneca Foods
The main advantage of trading using opposite Farmer Bros and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros 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.| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. SSMTF |
| Seneca Foods vs. Bridgford Foods | Seneca Foods vs. J J Snack | Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Central Garden Pet |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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