Correlation Between Tejon Ranch and Seaboard

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

By analyzing existing cross correlation between Tejon Ranch Co and Seaboard, you can compare the effects of market volatilities on Tejon Ranch and Seaboard 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 Tejon Ranch with a short position of Seaboard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tejon Ranch and Seaboard.

Diversification Opportunities for Tejon Ranch and Seaboard

0.58

Correlation Coefficient

Tejon Ranch  Seaboard

Very weak diversification

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

Pair Corralation between Tejon Ranch and Seaboard

Considering the 90-day investment horizon Tejon Ranch Co is expected to generate 1.44 times more return on investment than Seaboard. However, Tejon Ranch is 1.44 times more volatile than Seaboard. It trades about -0.12 of its potential returns per unit of risk. Seaboard is currently generating about -0.26 per unit of risk. If you would invest  1,809  in Tejon Ranch Co on August 18, 2024 and sell it today you would lose (205.00) from holding Tejon Ranch Co or give up 11.33% of portfolio value over 90 days.

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

Tejon Ranch Co  vs.  Seaboard

Tejon Ranch

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tejon Ranch Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tejon Ranch and Seaboard

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

The idea behind Tejon Ranch Co and Seaboard 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.