Correlation Between United States and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both United States 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 United States 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 United States Steel and SENECA FOODS A, you can compare the effects of market volatilities on United States 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 United States with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and SENECA FOODS-A.
Diversification Opportunities for United States and SENECA FOODS-A
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and SENECA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between United States and SENECA FOODS-A
Assuming the 90 days trading horizon United States Steel is expected to generate 0.93 times more return on investment than SENECA FOODS-A. However, United States Steel is 1.07 times less risky than SENECA FOODS-A. It trades about 0.04 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.02 per unit of risk. If you would invest 2,506 in United States Steel on August 24, 2024 and sell it today you would earn a total of 1,147 from holding United States Steel or generate 45.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. SENECA FOODS A
Performance |
| Timeline |
| United States Steel |
| SENECA FOODS A |
United States and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and SENECA FOODS-A
The main advantage of trading using opposite United States and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. CPU SOFTWAREHOUSE | United States vs. PRECISION DRILLING P | United States vs. Unity Software | United States vs. Take Two Interactive Software |
| SENECA FOODS-A vs. Chunghwa Telecom Co | SENECA FOODS-A vs. ScanSource | SENECA FOODS-A vs. Coor Service Management | SENECA FOODS-A vs. Cogent Communications Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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