Correlation Between Sterling Construction and SENECA FOODS
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and SENECA FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and SENECA FOODS A, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of SENECA FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and SENECA FOODS.
Diversification Opportunities for Sterling Construction and SENECA FOODS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sterling and SENECA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction 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 Sterling Construction 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 Sterling Construction 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 A has no effect on the direction of Sterling Construction i.e., Sterling Construction and SENECA FOODS go up and down completely randomly.
Pair Corralation between Sterling Construction and SENECA FOODS
Assuming the 90 days horizon Sterling Construction is expected to generate 1.03 times more return on investment than SENECA FOODS. However, Sterling Construction is 1.03 times more volatile than SENECA FOODS A. It trades about 0.12 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 3,160 in Sterling Construction on September 24, 2024 and sell it today you would earn a total of 13,750 from holding Sterling Construction or generate 435.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Construction vs. SENECA FOODS A
Performance |
| Timeline |
| Sterling Construction |
| SENECA FOODS A |
Sterling Construction and SENECA FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and SENECA FOODS
The main advantage of trading using opposite Sterling Construction and SENECA FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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's long position.| Sterling Construction vs. Iridium Communications | Sterling Construction vs. Zoom Video Communications | Sterling Construction vs. KENNAMETAL INC | Sterling Construction vs. Evolution Mining Limited |
| SENECA FOODS vs. National Beverage Corp | SENECA FOODS vs. PT Indofood Sukses | SENECA FOODS vs. Food Life Companies | SENECA FOODS vs. TYSON FOODS A |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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