Correlation Between SENECA FOODS and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and ECHO 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 and ECHO 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 ECHO INVESTMENT ZY, you can compare the effects of market volatilities on SENECA FOODS and ECHO 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 with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and ECHO INVESTMENT.
Diversification Opportunities for SENECA FOODS and ECHO INVESTMENT
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and ECHO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and SENECA FOODS 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between SENECA FOODS and ECHO INVESTMENT
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.61 times more return on investment than ECHO INVESTMENT. However, SENECA FOODS is 1.61 times more volatile than ECHO INVESTMENT ZY. It trades about 0.27 of its potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about -0.02 per unit of risk. If you would invest 5,650 in SENECA FOODS A on August 30, 2024 and sell it today you would earn a total of 950.00 from holding SENECA FOODS A or generate 16.81% 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. ECHO INVESTMENT ZY
Performance |
| Timeline |
| SENECA FOODS A |
| ECHO INVESTMENT ZY |
SENECA FOODS and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and ECHO INVESTMENT
The main advantage of trading using opposite SENECA FOODS and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, ECHO 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| SENECA FOODS vs. REGAL ASIAN INVESTMENTS | SENECA FOODS vs. Chuangs China Investments | SENECA FOODS vs. Methode Electronics | SENECA FOODS vs. LPKF Laser Electronics |
| ECHO INVESTMENT vs. MGIC INVESTMENT | ECHO INVESTMENT vs. REGAL ASIAN INVESTMENTS | ECHO INVESTMENT vs. FORWARD AIR P | ECHO INVESTMENT vs. Wizz Air 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 Stocks Directory module to find actively traded stocks across global markets.
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