Correlation Between SENECA FOODS-A and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Peloton Interactive 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 Peloton Interactive 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 Peloton Interactive, you can compare the effects of market volatilities on SENECA FOODS-A and Peloton Interactive 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 Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Peloton Interactive.
Diversification Opportunities for SENECA FOODS-A and Peloton Interactive
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SENECA and Peloton is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive 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 Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Peloton Interactive go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Peloton Interactive
Assuming the 90 days trading horizon SENECA FOODS-A is expected to generate 1.34 times less return on investment than Peloton Interactive. But when comparing it to its historical volatility, SENECA FOODS A is 1.86 times less risky than Peloton Interactive. It trades about 0.28 of its potential returns per unit of risk. Peloton Interactive is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 764.00 in Peloton Interactive on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Peloton Interactive or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SENECA FOODS A vs. Peloton Interactive
Performance |
| Timeline |
| SENECA FOODS A |
| Peloton Interactive |
SENECA FOODS-A and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Peloton Interactive
The main advantage of trading using opposite SENECA FOODS-A and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive'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 |
| Peloton Interactive vs. Li Ning Company | Peloton Interactive vs. Trip Group Limited | Peloton Interactive vs. Superior Plus Corp | Peloton Interactive vs. NMI 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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