Correlation Between SENECA FOODS and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS and SEI INVESTMENTS 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 SEI INVESTMENTS 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 SEI INVESTMENTS, you can compare the effects of market volatilities on SENECA FOODS and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS and SEI INVESTMENTS.
Diversification Opportunities for SENECA FOODS and SEI INVESTMENTS
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SENECA and SEI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of SENECA FOODS i.e., SENECA FOODS and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between SENECA FOODS and SEI INVESTMENTS
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.45 times more return on investment than SEI INVESTMENTS. However, SENECA FOODS is 1.45 times more volatile than SEI INVESTMENTS. It trades about 0.21 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.29 per unit of risk. If you would invest 5,450 in SENECA FOODS A on September 28, 2024 and sell it today you would earn a total of 1,650 from holding SENECA FOODS A or generate 30.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SENECA FOODS A vs. SEI INVESTMENTS
Performance |
Timeline |
SENECA FOODS A |
SEI INVESTMENTS |
SENECA FOODS and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SENECA FOODS and SEI INVESTMENTS
The main advantage of trading using opposite SENECA FOODS and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.The idea behind SENECA FOODS A and SEI INVESTMENTS 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.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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