Correlation Between Natural Alternatives and Seneca Foods

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

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

Diversification Opportunities for Natural Alternatives and Seneca Foods

-0.08

Correlation Coefficient

Natural Alternatives  Seneca Foods

Good diversification

The 3 months correlation between Natural and Seneca is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati 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 Natural Alternatives 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 Natural Alternatives International 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 Natural Alternatives i.e., Natural Alternatives and Seneca Foods go up and down completely randomly.

Pair Corralation between Natural Alternatives and Seneca Foods

Given the investment horizon of 90 days Natural Alternatives is expected to generate 6.58 times less return on investment than Seneca Foods. But when comparing it to its historical volatility, Natural Alternatives International is 1.33 times less risky than Seneca Foods. It trades about 0.07 of its potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  6,305  in Seneca Foods Corp on September 2, 2024 and sell it today you would earn a total of  899.00  from holding Seneca Foods Corp or generate 14.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Natural Alternatives Internati  vs.  Seneca Foods Corp

Natural Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Alternatives International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Seneca Foods Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 11 (%) 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 Natural Alternatives and Seneca Foods

The main advantage of trading using opposite Natural Alternatives and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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 Natural Alternatives International 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.