Correlation Between SENECA FOODS and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on SENECA FOODS and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and Deutsche Telekom.
Diversification Opportunities for SENECA FOODS and Deutsche Telekom
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SENECA and Deutsche is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and Deutsche Telekom go up and down completely randomly.
Pair Corralation between SENECA FOODS and Deutsche Telekom
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 2.13 times more return on investment than Deutsche Telekom. However, SENECA FOODS is 2.13 times more volatile than Deutsche Telekom AG. It trades about 0.21 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about 0.19 per unit of risk. If you would invest 5,600 in SENECA FOODS A on September 13, 2024 and sell it today you would earn a total of 1,150 from holding SENECA FOODS A or generate 20.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Deutsche Telekom AG
Performance |
| Timeline |
| SENECA FOODS A |
| Deutsche Telekom |
SENECA FOODS and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and Deutsche Telekom
The main advantage of trading using opposite SENECA FOODS and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.| SENECA FOODS vs. Check Point Software | SENECA FOODS vs. Consolidated Communications Holdings | SENECA FOODS vs. MAROC TELECOM | SENECA FOODS vs. Vishay Intertechnology |
| Deutsche Telekom vs. JIAHUA STORES | Deutsche Telekom vs. BJs Wholesale Club | Deutsche Telekom vs. Nordic Semiconductor ASA | Deutsche Telekom vs. MARKET VECTR RETAIL |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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