Correlation Between Seneca Foods and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Seneca Foods and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Natural Alternatives.
Diversification Opportunities for Seneca Foods and Natural Alternatives
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seneca and Natural is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Seneca Foods i.e., Seneca Foods and Natural Alternatives go up and down completely randomly.
Pair Corralation between Seneca Foods and Natural Alternatives
Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.28 times more return on investment than Natural Alternatives. However, Seneca Foods is 1.28 times more volatile than Natural Alternatives International. It trades about 0.36 of its potential returns per unit of risk. Natural Alternatives International is currently generating about 0.06 per unit of risk. If you would invest 6,182 in Seneca Foods Corp on September 1, 2024 and sell it today you would earn a total of 1,022 from holding Seneca Foods Corp or generate 16.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.9% |
| Values | Daily Returns |
Seneca Foods Corp vs. Natural Alternatives Internati
Performance |
| Timeline |
| Seneca Foods Corp |
| Natural Alternatives |
Seneca Foods and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seneca Foods and Natural Alternatives
The main advantage of trading using opposite Seneca Foods and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Seneca Foods vs. Bridgford Foods | Seneca Foods vs. J J Snack | Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Central Garden Pet |
| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Lifeway Foods |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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