Correlation Between SENECA FOODS-A and Talanx AG
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on SENECA FOODS-A and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and Talanx AG.
Diversification Opportunities for SENECA FOODS-A and Talanx AG
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SENECA and Talanx is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and Talanx AG go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and Talanx AG
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.83 times more return on investment than Talanx AG. However, SENECA FOODS-A is 1.83 times more volatile than Talanx AG. It trades about 0.25 of its potential returns per unit of risk. Talanx AG is currently generating about 0.26 per unit of risk. If you would invest 5,900 in SENECA FOODS A on October 7, 2024 and sell it today you would earn a total of 1,450 from holding SENECA FOODS A or generate 24.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SENECA FOODS A vs. Talanx AG
Performance |
Timeline |
SENECA FOODS A |
Talanx AG |
SENECA FOODS-A and Talanx AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SENECA FOODS-A and Talanx AG
The main advantage of trading using opposite SENECA FOODS-A and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.SENECA FOODS-A vs. GALENA MINING LTD | SENECA FOODS-A vs. GRIFFIN MINING LTD | SENECA FOODS-A vs. REVO INSURANCE SPA | SENECA FOODS-A vs. Perseus Mining Limited |
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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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