Correlation Between JBS SA and Seneca Foods

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

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

Diversification Opportunities for JBS SA and Seneca Foods

0.2

Correlation Coefficient

JBS SA  Seneca Foods

Modest diversification

The 3 months correlation between JBS and Seneca is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding JBS SA 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 JBS SA 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 JBS SA 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 JBS SA i.e., JBS SA and Seneca Foods go up and down completely randomly.

Pair Corralation between JBS SA and Seneca Foods

Assuming the 90 days horizon JBS SA is expected to generate 2.45 times more return on investment than Seneca Foods. However, JBS SA is 2.45 times more volatile than Seneca Foods Corp. It trades about 0.1 of its potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.13 per unit of risk. If you would invest  1,180  in JBS SA on December 27, 2024 and sell it today you would earn a total of  275.00  from holding JBS SA or generate 23.31% return on investment over 90 days.

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

JBS SA  vs.  Seneca Foods Corp

JBS SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, JBS SA showed solid returns over the last few months and may actually be approaching a breakup point.

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 10 (%) 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 JBS SA and Seneca Foods

The main advantage of trading using opposite JBS SA and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JBS SA 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 JBS SA 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.