Correlation Between High Liner and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both High Liner 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 High Liner and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and Lancaster Colony, you can compare the effects of market volatilities on High Liner 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 High Liner with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and Lancaster Colony.
Diversification Opportunities for High Liner and Lancaster Colony
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between High and Lancaster is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and High Liner 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 High Liner 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 High Liner i.e., High Liner and Lancaster Colony go up and down completely randomly.
Pair Corralation between High Liner and Lancaster Colony
Assuming the 90 days horizon High Liner Foods is expected to generate 0.64 times more return on investment than Lancaster Colony. However, High Liner Foods is 1.55 times less risky than Lancaster Colony. It trades about 0.37 of its potential returns per unit of risk. Lancaster Colony is currently generating about 0.02 per unit of risk. If you would invest 955.00 in High Liner Foods on August 31, 2024 and sell it today you would earn a total of 129.00 from holding High Liner Foods or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. Lancaster Colony
Performance |
| Timeline |
| High Liner Foods |
| Lancaster Colony |
High Liner and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and Lancaster Colony
The main advantage of trading using opposite High Liner and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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.| High Liner vs. Grupo Bimbo SAB | High Liner vs. Lamb Weston Holdings | High Liner vs. Kellanova | High Liner vs. Premier Foods Plc |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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