Correlation Between Seneca Foods and Archer Daniels

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

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

Diversification Opportunities for Seneca Foods and Archer Daniels

-0.7

Correlation Coefficient

Seneca Foods  Archer Daniels

Excellent diversification

The 3 months correlation between Seneca and Archer is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Seneca Foods 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 Seneca Foods Corp are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Seneca Foods i.e., Seneca Foods and Archer Daniels go up and down completely randomly.

Pair Corralation between Seneca Foods and Archer Daniels

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.12 times more return on investment than Archer Daniels. However, Seneca Foods is 1.12 times more volatile than Archer Daniels Midland. It trades about 0.16 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.1 per unit of risk. If you would invest  6,027  in Seneca Foods Corp on August 30, 2024 and sell it today you would earn a total of  1,073  from holding Seneca Foods Corp or generate 17.8% return on investment over 90 days.

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

Seneca Foods Corp  vs.  Archer Daniels Midland

Seneca Foods Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 12 (%) 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.

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Seneca Foods and Archer Daniels

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

The idea behind Seneca Foods Corp and Archer Daniels Midland 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.