Correlation Between Seneca Foods and Herbalife Nutrition

Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Herbalife Nutrition 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 Herbalife Nutrition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seneca Foods Corp and Herbalife Nutrition, you can compare the effects of market volatilities on Seneca Foods and Herbalife Nutrition 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 Herbalife Nutrition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Herbalife Nutrition.

Diversification Opportunities for Seneca Foods and Herbalife Nutrition

0.45

Correlation Coefficient

Seneca Foods  Herbalife Nutrition

Very weak diversification

The 3 months correlation between Seneca and Herbalife is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Herbalife Nutrition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herbalife Nutrition 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 Corp are associated (or correlated) with Herbalife Nutrition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herbalife Nutrition has no effect on the direction of Seneca Foods i.e., Seneca Foods and Herbalife Nutrition go up and down completely randomly.

Pair Corralation between Seneca Foods and Herbalife Nutrition

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 0.49 times more return on investment than Herbalife Nutrition. However, Seneca Foods Corp is 2.04 times less risky than Herbalife Nutrition. It trades about 0.18 of its potential returns per unit of risk. Herbalife Nutrition is currently generating about 0.0 per unit of risk. If you would invest  5,970  in Seneca Foods Corp on September 3, 2024 and sell it today you would earn a total of  1,240  from holding Seneca Foods Corp or generate 20.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Seneca Foods Corp  vs.  Herbalife Nutrition

Seneca Foods Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Herbalife Nutrition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herbalife Nutrition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Herbalife Nutrition is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Seneca Foods and Herbalife Nutrition

The main advantage of trading using opposite Seneca Foods and Herbalife Nutrition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods position performs unexpectedly, Herbalife Nutrition 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 Herbalife Nutrition will offset losses from the drop in Herbalife Nutrition's long position.

The idea behind Seneca Foods Corp and Herbalife Nutrition 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.