Correlation Between Lancaster Colony and Fresh Del
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Fresh Del 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 Fresh Del into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Fresh Del Monte, you can compare the effects of market volatilities on Lancaster Colony and Fresh Del 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 Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Fresh Del.
Diversification Opportunities for Lancaster Colony and Fresh Del
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lancaster and Fresh is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte 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 Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Fresh Del go up and down completely randomly.
Pair Corralation between Lancaster Colony and Fresh Del
Given the investment horizon of 90 days Lancaster Colony is expected to generate 12.21 times less return on investment than Fresh Del. But when comparing it to its historical volatility, Lancaster Colony is 1.02 times less risky than Fresh Del. It trades about 0.01 of its potential returns per unit of risk. Fresh Del Monte is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,289 in Fresh Del Monte on August 31, 2024 and sell it today you would earn a total of 1,086 from holding Fresh Del Monte or generate 47.44% 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. Fresh Del Monte
Performance |
| Timeline |
| Lancaster Colony |
| Fresh Del Monte |
Lancaster Colony and Fresh Del Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Fresh Del
The main advantage of trading using opposite Lancaster Colony and Fresh Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Fresh Del 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 Fresh Del will offset losses from the drop in Fresh Del's 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 |
| Fresh Del vs. Alico Inc | Fresh Del vs. SW Seed Company | Fresh Del vs. Adecoagro SA | Fresh Del vs. Brasilagro Adr |
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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