Correlation Between SENECA FOODS and American Eagle
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on SENECA FOODS and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and American Eagle.
Diversification Opportunities for SENECA FOODS and American Eagle
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SENECA and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and American Eagle go up and down completely randomly.
Pair Corralation between SENECA FOODS and American Eagle
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.95 times more return on investment than American Eagle. However, SENECA FOODS A is 1.05 times less risky than American Eagle. It trades about 0.08 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.03 per unit of risk. If you would invest 5,350 in SENECA FOODS A on August 29, 2024 and sell it today you would earn a total of 1,250 from holding SENECA FOODS A or generate 23.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. American Eagle Outfitters
Performance |
| Timeline |
| SENECA FOODS A |
| American Eagle Outfitters |
SENECA FOODS and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and American Eagle
The main advantage of trading using opposite SENECA FOODS and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle'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 |
| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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