Correlation Between G III and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both G III 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 G III 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 G III Apparel Group and SENECA FOODS A, you can compare the effects of market volatilities on G III 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 G III with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and SENECA FOODS-A.
Diversification Opportunities for G III and SENECA FOODS-A
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GI4 and SENECA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel 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 G III 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 G III Apparel 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 G III i.e., G III and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between G III and SENECA FOODS-A
Assuming the 90 days trading horizon G III Apparel Group is expected to generate 1.03 times more return on investment than SENECA FOODS-A. However, G III is 1.03 times more volatile than SENECA FOODS A. It trades about 0.07 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.03 per unit of risk. If you would invest 1,300 in G III Apparel Group on September 4, 2024 and sell it today you would earn a total of 1,680 from holding G III Apparel Group or generate 129.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. SENECA FOODS A
Performance |
| Timeline |
| G III Apparel |
| SENECA FOODS A |
G III and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and SENECA FOODS-A
The main advantage of trading using opposite G III and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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 G III Apparel Group 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. TOTAL GABON | SENECA FOODS-A vs. Walgreens Boots Alliance | SENECA FOODS-A vs. Peak Resources Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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