Correlation Between Fresh Del and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Fresh Del 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 Fresh Del and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresh Del Monte and Lancaster Colony, you can compare the effects of market volatilities on Fresh Del 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 Fresh Del with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresh Del and Lancaster Colony.
Diversification Opportunities for Fresh Del and Lancaster Colony
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresh and Lancaster is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Del Monte and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Fresh Del 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 Fresh Del Monte 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 Fresh Del i.e., Fresh Del and Lancaster Colony go up and down completely randomly.
Pair Corralation between Fresh Del and Lancaster Colony
Considering the 90-day investment horizon Fresh Del Monte is expected to generate 1.02 times more return on investment than Lancaster Colony. However, Fresh Del is 1.02 times more volatile than Lancaster Colony. It trades about 0.05 of its potential returns per unit of risk. Lancaster Colony is currently generating about 0.0 per unit of risk. If you would invest 2,592 in Fresh Del Monte on August 31, 2024 and sell it today you would earn a total of 783.00 from holding Fresh Del Monte or generate 30.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresh Del Monte vs. Lancaster Colony
Performance |
| Timeline |
| Fresh Del Monte |
| Lancaster Colony |
Fresh Del and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresh Del and Lancaster Colony
The main advantage of trading using opposite Fresh Del and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Del 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.| Fresh Del vs. Alico Inc | Fresh Del vs. SW Seed Company | Fresh Del vs. Adecoagro SA | Fresh Del vs. Brasilagro Adr |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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