Correlation Between Associated British and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Lancaster Colony, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Lancaster Colony.
Diversification Opportunities for Associated British and Lancaster Colony
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Lancaster is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Lancaster Colony go up and down completely randomly.
Pair Corralation between Associated British and Lancaster Colony
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Lancaster Colony. But the pink sheet apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.83 times less risky than Lancaster Colony. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Lancaster Colony is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 18,111 in Lancaster Colony on August 27, 2024 and sell it today you would earn a total of 753.00 from holding Lancaster Colony or generate 4.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Lancaster Colony
Performance |
| Timeline |
| Associated British Foods |
| Lancaster Colony |
Associated British and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Lancaster Colony
The main advantage of trading using opposite Associated British and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Darling Ingredients | Associated British vs. JM Smucker | Associated British vs. McCormick Company Incorporated | Associated British vs. Campbell Soup |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |