Correlation Between Seneca Foods and Central Garden
Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Central Garden 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 Seneca Foods and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seneca Foods Corp and Central Garden Pet, you can compare the effects of market volatilities on Seneca Foods and Central Garden 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 Seneca Foods with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Central Garden.
Diversification Opportunities for Seneca Foods and Central Garden
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seneca and Central is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and Seneca Foods 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 Seneca Foods Corp are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Seneca Foods i.e., Seneca Foods and Central Garden go up and down completely randomly.
Pair Corralation between Seneca Foods and Central Garden
Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.2 times more return on investment than Central Garden. However, Seneca Foods is 1.2 times more volatile than Central Garden Pet. It trades about 0.02 of its potential returns per unit of risk. Central Garden Pet is currently generating about 0.02 per unit of risk. If you would invest 6,709 in Seneca Foods Corp on August 27, 2024 and sell it today you would earn a total of 589.00 from holding Seneca Foods Corp or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seneca Foods Corp vs. Central Garden Pet
Performance |
| Timeline |
| Seneca Foods Corp |
| Central Garden Pet |
Seneca Foods and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seneca Foods and Central Garden
The main advantage of trading using opposite Seneca Foods and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Natures Sunshine Products | Seneca Foods vs. Associated British Foods |
| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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