Correlation Between SENECA FOODS-A and Kilroy Realty

Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Kilroy Realty 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 Kilroy Realty 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 Kilroy Realty Corp, you can compare the effects of market volatilities on SENECA FOODS-A and Kilroy Realty 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 Kilroy Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Kilroy Realty.

Diversification Opportunities for SENECA FOODS-A and Kilroy Realty

0.64

Correlation Coefficient

SENECA FOODS-A  Kilroy Realty

Poor diversification

The 3 months correlation between SENECA and Kilroy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Kilroy Realty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilroy Realty Corp 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 Kilroy Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilroy Realty Corp has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Kilroy Realty go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and Kilroy Realty

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.08 times more return on investment than Kilroy Realty. However, SENECA FOODS-A is 1.08 times more volatile than Kilroy Realty Corp. It trades about 0.23 of its potential returns per unit of risk. Kilroy Realty Corp is currently generating about 0.13 per unit of risk. If you would invest  5,450  in SENECA FOODS A on October 7, 2024 and sell it today you would earn a total of  1,900  from holding SENECA FOODS A or generate 34.86% return on investment over 90 days.

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

SENECA FOODS A  vs.  Kilroy Realty Corp

SENECA FOODS A

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SENECA FOODS-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Kilroy Realty Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kilroy Realty Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kilroy Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SENECA FOODS-A and Kilroy Realty

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

The idea behind SENECA FOODS A and Kilroy Realty Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.