Correlation Between Seneca Foods and Southern California

Can any of the company-specific risk be diversified away by investing in both Seneca Foods and Southern California 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 Southern California 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 Southern California Bancorp, you can compare the effects of market volatilities on Seneca Foods and Southern California 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 Southern California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seneca Foods and Southern California.

Diversification Opportunities for Seneca Foods and Southern California

0.61

Correlation Coefficient

Seneca Foods  Southern California

Poor diversification

The 3 months correlation between Seneca and Southern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Seneca Foods Corp and Southern California Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern California 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 Southern California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern California has no effect on the direction of Seneca Foods i.e., Seneca Foods and Southern California go up and down completely randomly.

Pair Corralation between Seneca Foods and Southern California

Assuming the 90 days horizon Seneca Foods Corp is expected to generate 1.45 times more return on investment than Southern California. However, Seneca Foods is 1.45 times more volatile than Southern California Bancorp. It trades about 0.16 of its potential returns per unit of risk. Southern California Bancorp is currently generating about 0.0 per unit of risk. If you would invest  9,402  in Seneca Foods Corp on May 5, 2025 and sell it today you would earn a total of  1,048  from holding Seneca Foods Corp or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	47.62%
Values	Daily Returns

Seneca Foods Corp  vs.  Southern California Bancorp

Seneca Foods Corp

Risk-Adjusted Performance

Good

Over the last 90 days Seneca Foods Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unsteady technical and fundamental indicators, Seneca Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Southern California

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southern California Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Southern California is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Seneca Foods and Southern California

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

The idea behind Seneca Foods Corp and Southern California Bancorp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.