Correlation Between SENECA FOODS-A and North American

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

Diversification Opportunities for SENECA FOODS-A and North American

-0.73

Correlation Coefficient

SENECA FOODS-A  North American

Pay attention - limited upside

The 3 months correlation between SENECA and North is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and North American go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and North American

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 0.71 times more return on investment than North American. However, SENECA FOODS A is 1.4 times less risky than North American. It trades about 0.12 of its potential returns per unit of risk. North American Construction is currently generating about -0.19 per unit of risk. If you would invest  7,400  in SENECA FOODS A on December 26, 2024 and sell it today you would earn a total of  400.00  from holding SENECA FOODS A or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

SENECA FOODS A  vs.  North American Construction

SENECA FOODS A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, SENECA FOODS-A may actually be approaching a critical reversion point that can send shares even higher in April 2025.

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SENECA FOODS-A and North American

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

The idea behind SENECA FOODS A and North American Construction 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..