Correlation Between Lakeland Industries and Stepan
Can any of the company-specific risk be diversified away by investing in both Lakeland Industries and Stepan 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 Lakeland Industries and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lakeland Industries and Stepan Company, you can compare the effects of market volatilities on Lakeland Industries and Stepan 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 Lakeland Industries with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Industries and Stepan.
Diversification Opportunities for Lakeland Industries and Stepan
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lakeland and Stepan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Lakeland Industries 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 Lakeland Industries are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Stepan go up and down completely randomly.
Pair Corralation between Lakeland Industries and Stepan
Given the investment horizon of 90 days Lakeland Industries is expected to generate 1.44 times more return on investment than Stepan. However, Lakeland Industries is 1.44 times more volatile than Stepan Company. It trades about 0.07 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 1,889 in Lakeland Industries on September 1, 2024 and sell it today you would earn a total of 375.00 from holding Lakeland Industries or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lakeland Industries vs. Stepan Company
Performance |
| Timeline |
| Lakeland Industries |
| Stepan Company |
Lakeland Industries and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lakeland Industries and Stepan
The main advantage of trading using opposite Lakeland Industries and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Industries position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Lakeland Industries vs. Vince Holding Corp | Lakeland Industries vs. Oxford Industries | Lakeland Industries vs. Gildan Activewear | Lakeland Industries vs. Columbia Sportswear |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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