Correlation Between SENECA FOODS-A and Major Drilling
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Major Drilling 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 Major Drilling 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 Major Drilling Group, you can compare the effects of market volatilities on SENECA FOODS-A and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Major Drilling.
Diversification Opportunities for SENECA FOODS-A and Major Drilling
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SENECA and Major is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Major Drilling go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Major Drilling
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.0 times more return on investment than Major Drilling. However, SENECA FOODS-A is 1.0 times more volatile than Major Drilling Group. It trades about 0.3 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.06 per unit of risk. If you would invest 5,550 in SENECA FOODS A on August 29, 2024 and sell it today you would earn a total of 1,050 from holding SENECA FOODS A or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Major Drilling Group
Performance |
| Timeline |
| SENECA FOODS A |
| Major Drilling Group |
SENECA FOODS-A and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Major Drilling
The main advantage of trading using opposite SENECA FOODS-A and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft | SENECA FOODS-A vs. Microsoft |
| Major Drilling vs. Superior Plus Corp | Major Drilling vs. NMI Holdings | Major Drilling vs. Origin Agritech | Major Drilling 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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