Correlation Between Inter Parfums and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Inter Parfums 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 Inter Parfums and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inter Parfums and Lancaster Colony, you can compare the effects of market volatilities on Inter Parfums 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 Inter Parfums with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Parfums and Lancaster Colony.
Diversification Opportunities for Inter Parfums and Lancaster Colony
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inter and Lancaster is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inter Parfums and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Inter Parfums 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 Inter Parfums 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 Inter Parfums i.e., Inter Parfums and Lancaster Colony go up and down completely randomly.
Pair Corralation between Inter Parfums and Lancaster Colony
Given the investment horizon of 90 days Inter Parfums is expected to generate 0.79 times more return on investment than Lancaster Colony. However, Inter Parfums is 1.27 times less risky than Lancaster Colony. It trades about 0.26 of its potential returns per unit of risk. Lancaster Colony is currently generating about 0.09 per unit of risk. If you would invest 12,441 in Inter Parfums on August 28, 2024 and sell it today you would earn a total of 1,398 from holding Inter Parfums or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inter Parfums vs. Lancaster Colony
Performance |
| Timeline |
| Inter Parfums |
| Lancaster Colony |
Inter Parfums and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inter Parfums and Lancaster Colony
The main advantage of trading using opposite Inter Parfums and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inter Parfums 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.| Inter Parfums vs. Hims Hers Health | Inter Parfums vs. Procter Gamble | Inter Parfums vs. Kimberly Clark | Inter Parfums vs. Colgate Palmolive |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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