Correlation Between Lancaster Colony and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Farmer Bros 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 Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Farmer Bros Co, you can compare the effects of market volatilities on Lancaster Colony and Farmer Bros 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 Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Farmer Bros.
Diversification Opportunities for Lancaster Colony and Farmer Bros
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lancaster and Farmer is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros 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 Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Farmer Bros go up and down completely randomly.
Pair Corralation between Lancaster Colony and Farmer Bros
Given the investment horizon of 90 days Lancaster Colony is expected to generate 10.46 times less return on investment than Farmer Bros. But when comparing it to its historical volatility, Lancaster Colony is 1.84 times less risky than Farmer Bros. It trades about 0.02 of its potential returns per unit of risk. Farmer Bros Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Farmer Bros Co on August 31, 2024 and sell it today you would earn a total of 19.00 from holding Farmer Bros Co or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Farmer Bros Co
Performance |
| Timeline |
| Lancaster Colony |
| Farmer Bros |
Lancaster Colony and Farmer Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Farmer Bros
The main advantage of trading using opposite Lancaster Colony and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Farmer Bros 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 Farmer Bros will offset losses from the drop in Farmer Bros' 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 |
| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. J J Snack |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |