Correlation Between Village Farms and Seneca Foods

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

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

Diversification Opportunities for Village Farms and Seneca Foods

0.39

Correlation Coefficient

Village Farms  Seneca Foods

Weak diversification

The 3 months correlation between Village and Seneca is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Village Farms International 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 Village Farms 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 Village Farms International 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 Village Farms i.e., Village Farms and Seneca Foods go up and down completely randomly.

Pair Corralation between Village Farms and Seneca Foods

Considering the 90-day investment horizon Village Farms International is expected to generate 2.4 times more return on investment than Seneca Foods. However, Village Farms is 2.4 times more volatile than Seneca Foods Corp. It trades about 0.17 of its potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.05 per unit of risk. If you would invest  69.00  in Village Farms International on March 6, 2025 and sell it today you would earn a total of  57.00  from holding Village Farms International or generate 82.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.71%
Values	Daily Returns

Village Farms International  vs.  Seneca Foods Corp

Village Farms Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Village Farms International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Village Farms reported solid returns over the last few months and may actually be approaching a breakup point.

Seneca Foods Corp

Risk-Adjusted Performance

Insignificant

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 may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Village Farms and Seneca Foods

The main advantage of trading using opposite Village Farms and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Farms 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 Village Farms International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.