Correlation Between SENECA FOODS-A and Tile Shop

Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Tile Shop 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-A and Tile Shop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SENECA FOODS A and Tile Shop Holdings, you can compare the effects of market volatilities on SENECA FOODS-A and Tile Shop 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-A with a short position of Tile Shop. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Tile Shop.

Diversification Opportunities for SENECA FOODS-A and Tile Shop

-0.35

Correlation Coefficient

SENECA FOODS-A  Tile Shop

Very good diversification

The 3 months correlation between SENECA and Tile is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Tile Shop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tile Shop Holdings and SENECA FOODS-A 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 A are associated (or correlated) with Tile Shop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tile Shop Holdings has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Tile Shop go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and Tile Shop

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.76 times more return on investment than Tile Shop. However, SENECA FOODS A is 1.32 times less risky than Tile Shop. It trades about 0.1 of its potential returns per unit of risk. Tile Shop Holdings is currently generating about -0.04 per unit of risk. If you would invest  7,200  in SENECA FOODS A on December 29, 2024 and sell it today you would earn a total of  750.00  from holding SENECA FOODS A or generate 10.42% return on investment over 90 days.

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

SENECA FOODS A  vs.  Tile Shop Holdings

SENECA FOODS A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tile Shop Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tile Shop Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tile Shop is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SENECA FOODS-A and Tile Shop

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

The idea behind SENECA FOODS A and Tile Shop Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.