Correlation Between AM EAGLE and SENECA FOODS-A

Can any of the company-specific risk be diversified away by investing in both AM EAGLE and SENECA FOODS-A 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 AM EAGLE and SENECA FOODS-A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AM EAGLE OUTFITTERS and SENECA FOODS A, you can compare the effects of market volatilities on AM EAGLE and SENECA FOODS-A 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 AM EAGLE with a short position of SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and SENECA FOODS-A.

Diversification Opportunities for AM EAGLE and SENECA FOODS-A

-0.73

Correlation Coefficient

AM EAGLE  SENECA FOODS-A

Pay attention - limited upside

The 3 months correlation between AFG and SENECA is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of AM EAGLE i.e., AM EAGLE and SENECA FOODS-A go up and down completely randomly.

Pair Corralation between AM EAGLE and SENECA FOODS-A

Assuming the 90 days trading horizon AM EAGLE is expected to generate 1.24 times less return on investment than SENECA FOODS-A. But when comparing it to its historical volatility, AM EAGLE OUTFITTERS is 1.07 times less risky than SENECA FOODS-A. It trades about 0.03 of its potential returns per unit of risk. SENECA FOODS A is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,700  in SENECA FOODS A on October 4, 2024 and sell it today you would earn a total of  1,700  from holding SENECA FOODS A or generate 29.82% return on investment over 90 days.

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

AM EAGLE OUTFITTERS  vs.  SENECA FOODS A

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AM EAGLE OUTFITTERS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SENECA FOODS A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AM EAGLE and SENECA FOODS-A

The main advantage of trading using opposite AM EAGLE and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.

The idea behind AM EAGLE OUTFITTERS and SENECA FOODS A 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .