Correlation Between Seneca Foods and Simply Good

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

Diversification Opportunities for Seneca Foods and Simply Good

0.27

Correlation Coefficient

Seneca Foods  Simply Good

Modest diversification

The 3 months correlation between Seneca and Simply is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Simply Good Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Good Foods 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 Simply Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Good Foods has no effect on the direction of Seneca Foods i.e., Seneca Foods and Simply Good go up and down completely randomly.

Pair Corralation between Seneca Foods and Simply Good

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.24 times more return on investment than Simply Good. However, Seneca Foods is 1.24 times more volatile than Simply Good Foods. It trades about 0.05 of its potential returns per unit of risk. Simply Good Foods is currently generating about 0.01 per unit of risk. If you would invest  5,492  in Seneca Foods Corp on November 20, 2024 and sell it today you would earn a total of  2,613  from holding Seneca Foods Corp or generate 47.58% return on investment over 90 days.

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

Seneca Foods Corp  vs.  Simply Good Foods

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 11 (%) 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.

Simply Good Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Good Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Simply Good is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Seneca Foods and Simply Good

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

The idea behind Seneca Foods Corp and Simply Good Foods 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 Global Correlations module to find global opportunities by holding instruments from different markets.