Correlation Between SENECA FOODS-A and Recruit Holdings
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Recruit Holdings 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 Recruit Holdings 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 Recruit Holdings Co, you can compare the effects of market volatilities on SENECA FOODS-A and Recruit Holdings 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 Recruit Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Recruit Holdings.
Diversification Opportunities for SENECA FOODS-A and Recruit Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Recruit is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Recruit Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recruit Holdings 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 Recruit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recruit Holdings has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Recruit Holdings go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Recruit Holdings
Assuming the 90 days trading horizon SENECA FOODS-A is expected to generate 1.07 times less return on investment than Recruit Holdings. In addition to that, SENECA FOODS-A is 1.0 times more volatile than Recruit Holdings Co. It trades about 0.28 of its total potential returns per unit of risk. Recruit Holdings Co is currently generating about 0.3 per unit of volatility. If you would invest 5,408 in Recruit Holdings Co on September 2, 2024 and sell it today you would earn a total of 1,008 from holding Recruit Holdings Co or generate 18.64% 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. Recruit Holdings Co
Performance |
| Timeline |
| SENECA FOODS A |
| Recruit Holdings |
SENECA FOODS-A and Recruit Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Recruit Holdings
The main advantage of trading using opposite SENECA FOODS-A and Recruit Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Recruit Holdings 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 Recruit Holdings will offset losses from the drop in Recruit Holdings' long position.| SENECA FOODS-A vs. FIREWEED METALS P | SENECA FOODS-A vs. ScanSource | SENECA FOODS-A vs. Grand Canyon Education | SENECA FOODS-A vs. Strategic Education |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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