Correlation Between Seneca Foods and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Lamb Weston 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 Lamb Weston 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 Lamb Weston Holdings, you can compare the effects of market volatilities on Seneca Foods and Lamb Weston 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 Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Lamb Weston.
Diversification Opportunities for Seneca Foods and Lamb Weston
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seneca and Lamb is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings 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 Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Seneca Foods i.e., Seneca Foods and Lamb Weston go up and down completely randomly.
Pair Corralation between Seneca Foods and Lamb Weston
Assuming the 90 days horizon Seneca Foods Corp is expected to generate 0.82 times more return on investment than Lamb Weston. However, Seneca Foods Corp is 1.22 times less risky than Lamb Weston. It trades about 0.37 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.23 per unit of risk. If you would invest 7,680 in Seneca Foods Corp on December 10, 2024 and sell it today you would earn a total of 1,087 from holding Seneca Foods Corp or generate 14.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Seneca Foods Corp vs. Lamb Weston Holdings
Performance |
Timeline |
Seneca Foods Corp |
Lamb Weston Holdings |
Seneca Foods and Lamb Weston Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seneca Foods and Lamb Weston
The main advantage of trading using opposite Seneca Foods and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods position performs unexpectedly, Lamb Weston 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 Lamb Weston will offset losses from the drop in Lamb Weston's long position.Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Central Garden Pet | Seneca Foods vs. Natures Sunshine Products | Seneca Foods vs. Associated British Foods |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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