Correlation Between Bed Bath and Seneca Foods

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Can any of the company-specific risk be diversified away by investing in both Bed Bath 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 Bed Bath and Seneca Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bed Bath Beyond and Seneca Foods Cp, you can compare the effects of market volatilities on Bed Bath 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 Bed Bath with a short position of Seneca Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bed Bath and Seneca Foods.

Diversification Opportunities for Bed Bath and Seneca Foods

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Bed Bath and Seneca is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Seneca Foods Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Cp and Bed Bath 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 Bed Bath Beyond 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 Cp has no effect on the direction of Bed Bath i.e., Bed Bath and Seneca Foods go up and down completely randomly.

Pair Corralation between Bed Bath and Seneca Foods

Given the investment horizon of 90 days Bed Bath Beyond is expected to generate 5.84 times more return on investment than Seneca Foods. However, Bed Bath is 5.84 times more volatile than Seneca Foods Cp. It trades about 0.1 of its potential returns per unit of risk. Seneca Foods Cp is currently generating about -0.07 per unit of risk. If you would invest  497.00  in Bed Bath Beyond on June 30, 2022 and sell it today you would earn a total of  141.00  from holding Bed Bath Beyond or generate 28.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bed Bath Beyond  vs.  Seneca Foods Cp

 Performance (%) 
       Timeline  
Bed Bath Beyond 
Bed Bath Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

Seneca Foods Cp 
Seneca Performance
0 of 100
Over the last 90 days Seneca Foods Cp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bed Bath and Seneca Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bed Bath and Seneca Foods

The main advantage of trading using opposite Bed Bath and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath 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.
Bed Bath vs. Clearwater Paper Corp
The idea behind Bed Bath Beyond and Seneca Foods Cp 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Seneca Foods as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Seneca Foods' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Seneca Foods' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Seneca Foods Cp.
Check out your portfolio center. 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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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