Correlation Between SENECA FOODS-A and Tradeweb Markets
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets, you can compare the effects of market volatilities on SENECA FOODS-A and Tradeweb Markets 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 Tradeweb Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Tradeweb Markets.
Diversification Opportunities for SENECA FOODS-A and Tradeweb Markets
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SENECA and Tradeweb is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets 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 Tradeweb Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradeweb Markets has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Tradeweb Markets go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Tradeweb Markets
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.9 times more return on investment than Tradeweb Markets. However, SENECA FOODS-A is 1.9 times more volatile than Tradeweb Markets. It trades about 0.14 of its potential returns per unit of risk. Tradeweb Markets is currently generating about 0.23 per unit of risk. If you would invest 5,200 in SENECA FOODS A on August 30, 2024 and sell it today you would earn a total of 1,300 from holding SENECA FOODS A or generate 25.0% 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. Tradeweb Markets
Performance |
| Timeline |
| SENECA FOODS A |
| Tradeweb Markets |
SENECA FOODS-A and Tradeweb Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Tradeweb Markets
The main advantage of trading using opposite SENECA FOODS-A and Tradeweb Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Tradeweb Markets 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 Tradeweb Markets will offset losses from the drop in Tradeweb Markets' long position.| SENECA FOODS-A vs. WESTLAKE CHEMICAL | SENECA FOODS-A vs. Sekisui Chemical Co | SENECA FOODS-A vs. Mitsui Chemicals | SENECA FOODS-A vs. China Resources Beer |
| Tradeweb Markets vs. ARISTOCRAT LEISURE | Tradeweb Markets vs. Japan Tobacco | Tradeweb Markets vs. Playtech plc | Tradeweb Markets vs. Flutter Entertainment PLC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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