Correlation Between SENECA FOODS-A and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Rio Tinto 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 Rio Tinto 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 Rio Tinto Group, you can compare the effects of market volatilities on SENECA FOODS-A and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Rio Tinto.
Diversification Opportunities for SENECA FOODS-A and Rio Tinto
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between SENECA and Rio is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Rio Tinto go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Rio Tinto
Assuming the 90 days trading horizon SENECA FOODS A is expected to under-perform the Rio Tinto. In addition to that, SENECA FOODS-A is 1.45 times more volatile than Rio Tinto Group. It trades about -0.26 of its total potential returns per unit of risk. Rio Tinto Group is currently generating about -0.01 per unit of volatility. If you would invest 7,053 in Rio Tinto Group on November 6, 2024 and sell it today you would lose (18.00) from holding Rio Tinto Group or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Rio Tinto Group
Performance |
| Timeline |
| SENECA FOODS A |
| Rio Tinto Group |
SENECA FOODS-A and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Rio Tinto
The main advantage of trading using opposite SENECA FOODS-A and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| SENECA FOODS-A vs. DALATA HOTEL | SENECA FOODS-A vs. Siemens Healthineers AG | SENECA FOODS-A vs. HEALTHSTREAM | SENECA FOODS-A vs. INTERCONT HOTELS |
| Rio Tinto vs. Gaming and Leisure | Rio Tinto vs. GREENX METALS LTD | Rio Tinto vs. GALENA MINING LTD | Rio Tinto vs. Columbia Sportswear |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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