Correlation Between SENECA FOODS and Bank of America
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and Bank of America 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 Bank of America 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 Verizon Communications, you can compare the effects of market volatilities on SENECA FOODS and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and Bank of America.
Diversification Opportunities for SENECA FOODS and Bank of America
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SENECA and Bank is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and Bank of America go up and down completely randomly.
Pair Corralation between SENECA FOODS and Bank of America
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.72 times more return on investment than Bank of America. However, SENECA FOODS is 1.72 times more volatile than Verizon Communications. It trades about 0.09 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.07 per unit of risk. If you would invest 4,560 in SENECA FOODS A on September 20, 2024 and sell it today you would earn a total of 2,590 from holding SENECA FOODS A or generate 56.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Verizon Communications
Performance |
| Timeline |
| SENECA FOODS A |
| Verizon Communications |
SENECA FOODS and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and Bank of America
The main advantage of trading using opposite SENECA FOODS and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| SENECA FOODS vs. American Eagle Outfitters | SENECA FOODS vs. JAPAN AIRLINES | SENECA FOODS vs. Tower One Wireless | SENECA FOODS vs. MAVEN WIRELESS SWEDEN |
| Bank of America vs. CAL MAINE FOODS | Bank of America vs. LIFEWAY FOODS | Bank of America vs. SENECA FOODS A | Bank of America vs. Collins Foods Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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