Correlation Between Seneca Foods and Post Holdings

Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Post Holdings 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 and Post Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seneca Foods Corp and Post Holdings, you can compare the effects of market volatilities on Seneca Foods and Post Holdings 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 with a short position of Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Post Holdings.

Diversification Opportunities for Seneca Foods and Post Holdings

-0.22

Correlation Coefficient

Seneca Foods  Post Holdings

Very good diversification

The 3 months correlation between Seneca and Post is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings and Seneca Foods 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 Corp are associated (or correlated) with Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Seneca Foods i.e., Seneca Foods and Post Holdings go up and down completely randomly.

Pair Corralation between Seneca Foods and Post Holdings

Assuming the 90 days horizon Seneca Foods is expected to generate 1.26 times less return on investment than Post Holdings. In addition to that, Seneca Foods is 1.91 times more volatile than Post Holdings. It trades about 0.02 of its total potential returns per unit of risk. Post Holdings is currently generating about 0.05 per unit of volatility. If you would invest  7,860  in Post Holdings on January 30, 2024 and sell it today you would earn a total of  2,678  from holding Post Holdings or generate 34.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Seneca Foods Corp  vs.  Post Holdings

Seneca Foods Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Post Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Post Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Post Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Seneca Foods and Post Holdings

The main advantage of trading using opposite Seneca Foods and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seneca Foods position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.

The idea behind Seneca Foods Corp and Post Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.