Correlation Between ELF Beauty and Seneca Foods

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

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

Diversification Opportunities for ELF Beauty and Seneca Foods

-0.69

Correlation Coefficient

ELF Beauty  Seneca Foods

Excellent diversification

The 3 months correlation between ELF and Seneca is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ELF Beauty and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp and ELF Beauty 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 ELF Beauty are associated (or correlated) with Seneca Foods. 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 Corp has no effect on the direction of ELF Beauty i.e., ELF Beauty and Seneca Foods go up and down completely randomly.

Pair Corralation between ELF Beauty and Seneca Foods

Considering the 90-day investment horizon ELF Beauty is expected to under-perform the Seneca Foods. In addition to that, ELF Beauty is 1.12 times more volatile than Seneca Foods Corp. It trades about -0.23 of its total potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.12 per unit of volatility. If you would invest  7,903  in Seneca Foods Corp on December 27, 2024 and sell it today you would earn a total of  818.00  from holding Seneca Foods Corp or generate 10.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	41.67%
Values	Daily Returns

ELF Beauty  vs.  Seneca Foods Corp

ELF Beauty

Risk-Adjusted Performance

Very Weak

Over the last 90 days ELF Beauty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Seneca Foods Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ELF Beauty and Seneca Foods

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

The idea behind ELF Beauty and Seneca Foods Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.