Correlation Between Flowers Foods and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Flowers Foods 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 Flowers Foods and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowers Foods and Lancaster Colony, you can compare the effects of market volatilities on Flowers Foods 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 Flowers Foods with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowers Foods and Lancaster Colony.
Diversification Opportunities for Flowers Foods and Lancaster Colony
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flowers and Lancaster is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Flowers Foods and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Flowers Foods 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 Flowers 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 Flowers Foods i.e., Flowers Foods and Lancaster Colony go up and down completely randomly.
Pair Corralation between Flowers Foods and Lancaster Colony
Considering the 90-day investment horizon Flowers Foods is expected to generate 1.86 times less return on investment than Lancaster Colony. But when comparing it to its historical volatility, Flowers Foods is 1.68 times less risky than Lancaster Colony. It trades about 0.03 of its potential returns per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowers Foods vs. Lancaster Colony
Performance |
| Timeline |
| Flowers Foods |
| Lancaster Colony |
Flowers Foods and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowers Foods and Lancaster Colony
The main advantage of trading using opposite Flowers Foods and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowers Foods 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.| Flowers Foods vs. ConAgra Foods | Flowers Foods vs. McCormick Company Incorporated | Flowers Foods vs. Campbell Soup | Flowers Foods vs. Kellanova |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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