Correlation Between SENECA FOODS-A and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Gladstone Investment 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-A and Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and Gladstone Investment, you can compare the effects of market volatilities on SENECA FOODS-A and Gladstone Investment 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-A with a short position of Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Gladstone Investment.
Diversification Opportunities for SENECA FOODS-A and Gladstone Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Gladstone is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment and SENECA FOODS-A 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 A are associated (or correlated) with Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Gladstone Investment go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Gladstone Investment
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.22 times more return on investment than Gladstone Investment. However, SENECA FOODS-A is 1.22 times more volatile than Gladstone Investment. It trades about 0.08 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.05 per unit of risk. If you would invest 5,250 in SENECA FOODS A on September 1, 2024 and sell it today you would earn a total of 1,200 from holding SENECA FOODS A or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Gladstone Investment
Performance |
| Timeline |
| SENECA FOODS A |
| Gladstone Investment |
SENECA FOODS-A and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Gladstone Investment
The main advantage of trading using opposite SENECA FOODS-A and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.| SENECA FOODS-A vs. SIVERS SEMICONDUCTORS AB | SENECA FOODS-A vs. Darden Restaurants | SENECA FOODS-A vs. Reliance Steel Aluminum | SENECA FOODS-A vs. Q2M Managementberatung AG |
| Gladstone Investment vs. MINCO SILVER | Gladstone Investment vs. Perdoceo Education | Gladstone Investment vs. Grand Canyon Education | Gladstone Investment vs. RYU Apparel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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