Correlation Between SENECA FOODS-A and Laureate Education
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on SENECA FOODS-A and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Laureate Education.
Diversification Opportunities for SENECA FOODS-A and Laureate Education
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SENECA and Laureate is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Laureate Education go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Laureate Education
Assuming the 90 days trading horizon SENECA FOODS-A is expected to generate 2.28 times less return on investment than Laureate Education. In addition to that, SENECA FOODS-A is 1.44 times more volatile than Laureate Education. It trades about 0.02 of its total potential returns per unit of risk. Laureate Education is currently generating about 0.08 per unit of volatility. If you would invest 883.00 in Laureate Education on September 3, 2024 and sell it today you would earn a total of 897.00 from holding Laureate Education or generate 101.59% 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. Laureate Education
Performance |
| Timeline |
| SENECA FOODS A |
| Laureate Education |
SENECA FOODS-A and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and Laureate Education
The main advantage of trading using opposite SENECA FOODS-A and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| SENECA FOODS-A vs. TOTAL GABON | SENECA FOODS-A vs. Walgreens Boots Alliance | SENECA FOODS-A vs. Peak Resources Limited |
| Laureate Education vs. SENECA FOODS A | Laureate Education vs. PT Global Mediacom | Laureate Education vs. PREMIER FOODS | Laureate Education vs. United Natural Foods |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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