Correlation Between Bellring Brands and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Bellring Brands 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 Bellring Brands and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bellring Brands LLC and Lancaster Colony, you can compare the effects of market volatilities on Bellring Brands 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 Bellring Brands with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bellring Brands and Lancaster Colony.
Diversification Opportunities for Bellring Brands and Lancaster Colony
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bellring and Lancaster is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Bellring Brands 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 Bellring Brands LLC 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 Bellring Brands i.e., Bellring Brands and Lancaster Colony go up and down completely randomly.
Pair Corralation between Bellring Brands and Lancaster Colony
Given the investment horizon of 90 days Bellring Brands LLC is expected to generate 0.5 times more return on investment than Lancaster Colony. However, Bellring Brands LLC is 2.01 times less risky than Lancaster Colony. It trades about 0.65 of its potential returns per unit of risk. Lancaster Colony is currently generating about 0.09 per unit of risk. If you would invest 6,510 in Bellring Brands LLC on August 28, 2024 and sell it today you would earn a total of 1,192 from holding Bellring Brands LLC or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bellring Brands LLC vs. Lancaster Colony
Performance |
| Timeline |
| Bellring Brands LLC |
| Lancaster Colony |
Bellring Brands and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bellring Brands and Lancaster Colony
The main advantage of trading using opposite Bellring Brands and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellring Brands 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.| Bellring Brands vs. Treehouse Foods | Bellring Brands vs. Pilgrims Pride Corp | Bellring Brands vs. Ingredion Incorporated | Bellring Brands vs. JM Smucker |
| 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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