Correlation Between SENECA FOODS-A and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM, you can compare the effects of market volatilities on SENECA FOODS-A and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and CARSALESCOM.
Diversification Opportunities for SENECA FOODS-A and CARSALESCOM
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SENECA and CARSALESCOM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and CARSALESCOM go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and CARSALESCOM
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 2.0 times more return on investment than CARSALESCOM. However, SENECA FOODS-A is 2.0 times more volatile than CARSALESCOM. It trades about 0.16 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.14 per unit of risk. If you would invest 5,150 in SENECA FOODS A on August 28, 2024 and sell it today you would earn a total of 1,600 from holding SENECA FOODS A or generate 31.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
SENECA FOODS A vs. CARSALESCOM
Performance |
| Timeline |
| SENECA FOODS A |
| CARSALESCOM |
SENECA FOODS-A and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and CARSALESCOM
The main advantage of trading using opposite SENECA FOODS-A and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Apple Inc | SENECA FOODS-A vs. Microsoft | SENECA FOODS-A vs. Microsoft |
| CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Microsoft | CARSALESCOM vs. Microsoft |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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