Correlation Between Lancaster Colony and Greencore Group
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Greencore Group 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 Greencore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Greencore Group PLC, you can compare the effects of market volatilities on Lancaster Colony and Greencore Group 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 Greencore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Greencore Group.
Diversification Opportunities for Lancaster Colony and Greencore Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lancaster and Greencore is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Greencore Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencore Group PLC 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 Greencore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencore Group PLC has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Greencore Group go up and down completely randomly.
Pair Corralation between Lancaster Colony and Greencore Group
Given the investment horizon of 90 days Lancaster Colony is expected to generate 10.8 times less return on investment than Greencore Group. But when comparing it to its historical volatility, Lancaster Colony is 1.49 times less risky than Greencore Group. It trades about 0.01 of its potential returns per unit of risk. Greencore Group PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 850.00 in Greencore Group PLC on September 5, 2024 and sell it today you would earn a total of 270.00 from holding Greencore Group PLC or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Greencore Group PLC
Performance |
| Timeline |
| Lancaster Colony |
| Greencore Group PLC |
Lancaster Colony and Greencore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Greencore Group
The main advantage of trading using opposite Lancaster Colony and Greencore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Greencore Group 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 Greencore Group will offset losses from the drop in Greencore Group'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 |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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