Correlation Between SENECA FOODS-A and Food Life
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Food Life 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 Food Life 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 Food Life Companies, you can compare the effects of market volatilities on SENECA FOODS-A and Food Life 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 Food Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Food Life.
Diversification Opportunities for SENECA FOODS-A and Food Life
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Food is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies 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 Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Food Life go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Food Life
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.31 times more return on investment than Food Life. However, SENECA FOODS-A is 1.31 times more volatile than Food Life Companies. It trades about 0.32 of its potential returns per unit of risk. Food Life Companies is currently generating about 0.12 per unit of risk. If you would invest 5,550 in SENECA FOODS A on August 25, 2024 and sell it today you would earn a total of 1,100 from holding SENECA FOODS A or generate 19.82% 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. Food Life Companies
Performance |
| Timeline |
| SENECA FOODS A |
| Food Life Companies |
SENECA FOODS-A and Food Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Food Life
The main advantage of trading using opposite SENECA FOODS-A and Food Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Food Life 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 Food Life will offset losses from the drop in Food Life's long position.| 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 |
| Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings | Food Life vs. Origin Agritech | Food Life vs. SIVERS SEMICONDUCTORS AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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