Correlation Between Seneca Foods and Nates Food

Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Nates Food 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 Nates Food 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 Nates Food Co, you can compare the effects of market volatilities on Seneca Foods and Nates Food 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 Nates Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Nates Food.

Diversification Opportunities for Seneca Foods and Nates Food

0.31

Correlation Coefficient

Seneca Foods  Nates Food

Weak diversification

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

Pair Corralation between Seneca Foods and Nates Food

Assuming the 90 days horizon Seneca Foods is expected to generate 238.55 times less return on investment than Nates Food. But when comparing it to its historical volatility, Seneca Foods Corp is 133.7 times less risky than Nates Food. It trades about 0.12 of its potential returns per unit of risk. Nates Food Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Nates Food Co on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Nates Food Co or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.33%
Values	Daily Returns

Seneca Foods Corp  vs.  Nates Food Co

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 9 (%) 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.

Nates Food

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seneca Foods and Nates Food

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

The idea behind Seneca Foods Corp and Nates Food Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.