Correlation Between Archer Daniels and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Archer Daniels and Lancaster Colony 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 Archer Daniels and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Lancaster Colony, you can compare the effects of market volatilities on Archer Daniels and Lancaster Colony 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 Archer Daniels with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Lancaster Colony.
Diversification Opportunities for Archer Daniels and Lancaster Colony
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Archer and Lancaster is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Archer Daniels 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 Archer Daniels Midland are associated (or correlated) with Lancaster Colony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancaster Colony has no effect on the direction of Archer Daniels i.e., Archer Daniels and Lancaster Colony go up and down completely randomly.
Pair Corralation between Archer Daniels and Lancaster Colony
Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the Lancaster Colony. But the stock apears to be less risky and, when comparing its historical volatility, Archer Daniels Midland is 1.26 times less risky than Lancaster Colony. The stock trades about -0.05 of its potential returns per unit of risk. The Lancaster Colony is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,951 in Lancaster Colony on August 27, 2024 and sell it today you would earn a total of 913.00 from holding Lancaster Colony or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archer Daniels Midland vs. Lancaster Colony
Performance |
| Timeline |
| Archer Daniels Midland |
| Lancaster Colony |
Archer Daniels and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archer Daniels and Lancaster Colony
The main advantage of trading using opposite Archer Daniels and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels position performs unexpectedly, Lancaster Colony 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 Lancaster Colony will offset losses from the drop in Lancaster Colony's long position.| Archer Daniels vs. Adecoagro SA | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Tyson Foods | Archer Daniels vs. Fresh Del Monte |
| Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. John B Sanfilippo | Lancaster Colony vs. Seneca Foods Corp | Lancaster Colony vs. Seneca Foods Corp |
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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |