Correlation Between SENECA FOODS and Nike
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on SENECA FOODS and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and Nike.
Diversification Opportunities for SENECA FOODS and Nike
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SENECA and Nike is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and Nike go up and down completely randomly.
Pair Corralation between SENECA FOODS and Nike
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.72 times more return on investment than Nike. However, SENECA FOODS is 1.72 times more volatile than Nike Inc. It trades about 0.17 of its potential returns per unit of risk. Nike Inc is currently generating about -0.02 per unit of risk. If you would invest 6,600 in SENECA FOODS A on September 28, 2024 and sell it today you would earn a total of 500.00 from holding SENECA FOODS A or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. Nike Inc
Performance |
| Timeline |
| SENECA FOODS A |
| Nike Inc |
SENECA FOODS and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS and Nike
The main advantage of trading using opposite SENECA FOODS and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.The idea behind SENECA FOODS A and Nike Inc 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.| Nike vs. Strategic Investments AS | Nike vs. alstria office REIT AG | Nike vs. MAGIC SOFTWARE ENTR | Nike vs. PennyMac Mortgage Investment |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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