Correlation Between Lancaster Colony and Central Garden
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Central Garden 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 Lancaster Colony and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Central Garden Pet, you can compare the effects of market volatilities on Lancaster Colony and Central Garden 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 Lancaster Colony with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Central Garden.
Diversification Opportunities for Lancaster Colony and Central Garden
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lancaster and Central is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and Lancaster Colony 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 Lancaster Colony are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Central Garden go up and down completely randomly.
Pair Corralation between Lancaster Colony and Central Garden
Given the investment horizon of 90 days Lancaster Colony is expected to generate 2.35 times less return on investment than Central Garden. In addition to that, Lancaster Colony is 1.67 times more volatile than Central Garden Pet. It trades about 0.11 of its total potential returns per unit of risk. Central Garden Pet is currently generating about 0.42 per unit of volatility. If you would invest 3,370 in Central Garden Pet on August 24, 2024 and sell it today you would earn a total of 494.00 from holding Central Garden Pet or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Central Garden Pet
Performance |
| Timeline |
| Lancaster Colony |
| Central Garden Pet |
Lancaster Colony and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Central Garden
The main advantage of trading using opposite Lancaster Colony and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.| Lancaster Colony vs. Bellring Brands LLC | Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. Ingredion Incorporated | Lancaster Colony vs. JM Smucker |
| Central Garden vs. McCormick Company Incorporated | Central Garden vs. Natures Sunshine Products | Central Garden vs. Seneca Foods Corp | Central Garden vs. Central Garden Pet |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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