Correlation Between Lancaster Colony and JBS SA
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and JBS SA 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 JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and JBS SA, you can compare the effects of market volatilities on Lancaster Colony and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and JBS SA.
Diversification Opportunities for Lancaster Colony and JBS SA
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lancaster and JBS is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and JBS SA go up and down completely randomly.
Pair Corralation between Lancaster Colony and JBS SA
Given the investment horizon of 90 days Lancaster Colony is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, Lancaster Colony is 1.14 times less risky than JBS SA. The stock trades about 0.0 of its potential returns per unit of risk. The JBS SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,237 in JBS SA on September 5, 2024 and sell it today you would earn a total of 23.00 from holding JBS SA or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lancaster Colony vs. JBS SA
Performance |
| Timeline |
| Lancaster Colony |
| JBS SA |
Lancaster Colony and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and JBS SA
The main advantage of trading using opposite Lancaster Colony and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA'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 |
| JBS SA vs. BRF SA ADR | JBS SA vs. Natures Sunshine Products | JBS SA vs. Marfrig Global Foods | JBS SA vs. Bridgford Foods |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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