Correlation Between General Mills and Seneca Foods

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

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

Diversification Opportunities for General Mills and Seneca Foods

0.16

Correlation Coefficient

General Mills  Seneca Foods

Average diversification

The 3 months correlation between General and Seneca is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Mills 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 General Mills 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 General Mills 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 General Mills i.e., General Mills and Seneca Foods go up and down completely randomly.

Pair Corralation between General Mills and Seneca Foods

Considering the 90-day investment horizon General Mills is expected to under-perform the Seneca Foods. In addition to that, General Mills is 1.04 times more volatile than Seneca Foods Corp. It trades about -0.04 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  7,938  in Seneca Foods Corp on December 29, 2024 and sell it today you would earn a total of  985.00  from holding Seneca Foods Corp or generate 12.41% return on investment over 90 days.

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

General Mills  vs.  Seneca Foods Corp

General Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Mills has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, General Mills is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 weak 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 General Mills and Seneca Foods

The main advantage of trading using opposite General Mills and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills 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 General Mills 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.