Correlation Between Seneca Foods and Altria

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

Diversification Opportunities for Seneca Foods and Altria

0.09

Correlation Coefficient

Seneca Foods  Altria

Significant diversification

The 3 months correlation between Seneca and Altria is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of Seneca Foods i.e., Seneca Foods and Altria go up and down completely randomly.

Pair Corralation between Seneca Foods and Altria

Assuming the 90 days horizon Seneca Foods Corp is expected to under-perform the Altria. In addition to that, Seneca Foods is 1.78 times more volatile than Altria Group. It trades about -0.59 of its total potential returns per unit of risk. Altria Group is currently generating about -0.34 per unit of volatility. If you would invest  5,479  in Altria Group on October 10, 2024 and sell it today you would lose (333.00) from holding Altria Group or give up 6.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	25.0%
Values	Daily Returns

Seneca Foods Corp  vs.  Altria Group

Seneca Foods Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Seneca Foods Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unsteady technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Altria Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Altria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Seneca Foods and Altria

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

The idea behind Seneca Foods Corp and Altria Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.