Correlation Between SW Seed and Scheid Vineyards

Can any of the company-specific risk be diversified away by investing in both SW Seed and Scheid Vineyards 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 SW Seed and Scheid Vineyards into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SW Seed Company and Scheid Vineyards, you can compare the effects of market volatilities on SW Seed and Scheid Vineyards 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 SW Seed with a short position of Scheid Vineyards. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Seed and Scheid Vineyards.

Diversification Opportunities for SW Seed and Scheid Vineyards

-0.31

Correlation Coefficient

SW Seed  Scheid Vineyards

Very good diversification

The 3 months correlation between SANW and Scheid is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SW Seed Company and Scheid Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scheid Vineyards and SW Seed 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 SW Seed Company are associated (or correlated) with Scheid Vineyards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scheid Vineyards has no effect on the direction of SW Seed i.e., SW Seed and Scheid Vineyards go up and down completely randomly.

Pair Corralation between SW Seed and Scheid Vineyards

If you would invest  467.00  in SW Seed Company on September 13, 2024 and sell it today you would earn a total of  39.00  from holding SW Seed Company or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

SW Seed Company  vs.  Scheid Vineyards

SW Seed Company

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SW Seed Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SW Seed showed solid returns over the last few months and may actually be approaching a breakup point.

Scheid Vineyards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scheid Vineyards has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Scheid Vineyards is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SW Seed and Scheid Vineyards

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

The idea behind SW Seed Company and Scheid Vineyards 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.