Correlation Between Renesas Electronics and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics and SENECA FOODS A, you can compare the effects of market volatilities on Renesas Electronics 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 Renesas Electronics with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renesas Electronics and SENECA FOODS-A.
Diversification Opportunities for Renesas Electronics and SENECA FOODS-A
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Renesas and SENECA is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics i.e., Renesas Electronics and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between Renesas Electronics and SENECA FOODS-A
Assuming the 90 days horizon Renesas Electronics is expected to generate 1.52 times less return on investment than SENECA FOODS-A. But when comparing it to its historical volatility, Renesas Electronics is 1.03 times less risky than SENECA FOODS-A. It trades about 0.06 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,800 in SENECA FOODS A on October 13, 2024 and sell it today you would earn a total of 250.00 from holding SENECA FOODS A or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renesas Electronics vs. SENECA FOODS A
Performance |
| Timeline |
| Renesas Electronics |
| SENECA FOODS A |
Renesas Electronics and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renesas Electronics and SENECA FOODS-A
The main advantage of trading using opposite Renesas Electronics and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renesas Electronics 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.| Renesas Electronics vs. SWISS WATER DECAFFCOFFEE | Renesas Electronics vs. VELA TECHNOLPLC LS 0001 | Renesas Electronics vs. ORMAT TECHNOLOGIES | Renesas Electronics vs. GOLD ROAD RES |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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