Correlation Between Natures Sunshine and Seneca Foods

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

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

Diversification Opportunities for Natures Sunshine and Seneca Foods

-0.58

Correlation Coefficient

Natures Sunshine  Seneca Foods

Excellent diversification

The 3 months correlation between Natures and Seneca is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp and Natures Sunshine 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 Natures Sunshine Products are associated (or correlated) with Seneca Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seneca Foods Corp has no effect on the direction of Natures Sunshine i.e., Natures Sunshine and Seneca Foods go up and down completely randomly.

Pair Corralation between Natures Sunshine and Seneca Foods

Given the investment horizon of 90 days Natures Sunshine is expected to generate 2.54 times less return on investment than Seneca Foods. In addition to that, Natures Sunshine is 1.26 times more volatile than Seneca Foods Corp. It trades about 0.02 of its total potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,760  in Seneca Foods Corp on January 17, 2025 and sell it today you would earn a total of  3,517  from holding Seneca Foods Corp or generate 73.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Natures Sunshine Products  vs.  Seneca Foods Corp

Natures Sunshine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natures Sunshine Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Seneca Foods Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seneca Foods Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natures Sunshine and Seneca Foods

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

The idea behind Natures Sunshine Products and Seneca Foods 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.