Correlation Between SENECA FOODS-A and NVR

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

Diversification Opportunities for SENECA FOODS-A and NVR

-0.82

Correlation Coefficient

SENECA FOODS-A  NVR

Pay attention - limited upside

The 3 months correlation between SENECA and NVR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR Inc 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 NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and NVR go up and down completely randomly.

Pair Corralation between SENECA FOODS-A and NVR

Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.03 times more return on investment than NVR. However, SENECA FOODS-A is 1.03 times more volatile than NVR Inc. It trades about 0.09 of its potential returns per unit of risk. NVR Inc is currently generating about -0.14 per unit of risk. If you would invest  7,200  in SENECA FOODS A on December 28, 2024 and sell it today you would earn a total of  650.00  from holding SENECA FOODS A or generate 9.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

SENECA FOODS A  vs.  NVR Inc

SENECA FOODS A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SENECA FOODS A are ranked lower than 6 (%) 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.

NVR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVR Inc 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 NVR

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

The idea behind SENECA FOODS A and NVR Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.