Correlation Between SENECA FOODS-A and Merit Medical

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Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on SENECA FOODS-A and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Merit Medical.

Diversification Opportunities for SENECA FOODS-A and Merit Medical

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SENECA and Merit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Merit Medical go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and Merit Medical

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 2.06 times more return on investment than Merit Medical. However, SENECA FOODS-A is 2.06 times more volatile than Merit Medical Systems. It trades about 0.09 of its potential returns per unit of risk. Merit Medical Systems is currently generating about -0.26 per unit of risk. If you would invest  6,800  in SENECA FOODS A on October 13, 2024 and sell it today you would earn a total of  250.00  from holding SENECA FOODS A or generate 3.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.44%
ValuesDaily Returns

SENECA FOODS A  vs.  Merit Medical Systems

 Performance 
       Timeline  
SENECA FOODS A 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.
Merit Medical Systems 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Merit Medical Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Merit Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SENECA FOODS-A and Merit Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SENECA FOODS-A and Merit Medical

The main advantage of trading using opposite SENECA FOODS-A and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.
The idea behind SENECA FOODS A and Merit Medical Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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