Correlation Between Lancaster Colony and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Dow Jones Industrial, you can compare the effects of market volatilities on Lancaster Colony and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Dow Jones.
Diversification Opportunities for Lancaster Colony and Dow Jones
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lancaster and Dow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Dow Jones go up and down completely randomly.
Pair Corralation between Lancaster Colony and Dow Jones
Given the investment horizon of 90 days Lancaster Colony is expected to generate 5.03 times less return on investment than Dow Jones. In addition to that, Lancaster Colony is 2.55 times more volatile than Dow Jones Industrial. It trades about 0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.29 per unit of volatility. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Dow Jones Industrial
Performance |
| Timeline |
Lancaster Colony and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lancaster Colony
Pair trading matchups for Lancaster Colony
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lancaster Colony and Dow Jones
The main advantage of trading using opposite Lancaster Colony and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. John B Sanfilippo | Lancaster Colony vs. Seneca Foods Corp | Lancaster Colony vs. Seneca Foods Corp |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |