Correlation Between SENECA FOODS-A and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and FirstGroup Plc 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 FirstGroup Plc 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 FirstGroup plc, you can compare the effects of market volatilities on SENECA FOODS-A and FirstGroup Plc 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 FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and FirstGroup Plc.
Diversification Opportunities for SENECA FOODS-A and FirstGroup Plc
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SENECA and FirstGroup is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and FirstGroup Plc go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and FirstGroup Plc
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.5 times more return on investment than FirstGroup Plc. However, SENECA FOODS-A is 1.5 times more volatile than FirstGroup plc. It trades about 0.14 of its potential returns per unit of risk. FirstGroup plc is currently generating about 0.03 per unit of risk. If you would invest 5,250 in SENECA FOODS A on September 9, 2024 and sell it today you would earn a total of 1,400 from holding SENECA FOODS A or generate 26.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SENECA FOODS A vs. FirstGroup plc
Performance |
Timeline |
SENECA FOODS A |
FirstGroup plc |
SENECA FOODS-A and FirstGroup Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SENECA FOODS-A and FirstGroup Plc
The main advantage of trading using opposite SENECA FOODS-A and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, FirstGroup Plc 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 FirstGroup Plc will offset losses from the drop in FirstGroup Plc's long position.SENECA FOODS-A vs. CeoTronics AG | SENECA FOODS-A vs. Platinum Investment Management | SENECA FOODS-A vs. GFL ENVIRONM | SENECA FOODS-A vs. Scandinavian Tobacco Group |
FirstGroup Plc vs. Mitsubishi Gas Chemical | FirstGroup Plc vs. Brockhaus Capital Management | FirstGroup Plc vs. Cleanaway Waste Management | FirstGroup Plc vs. AGF Management Limited |
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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