Correlation Between Lancaster Colony and USANA Health
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and USANA Health 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 USANA Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and USANA Health Sciences, you can compare the effects of market volatilities on Lancaster Colony and USANA Health 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 USANA Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and USANA Health.
Diversification Opportunities for Lancaster Colony and USANA Health
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lancaster and USANA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and USANA Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USANA Health Sciences 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 USANA Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USANA Health Sciences has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and USANA Health go up and down completely randomly.
Pair Corralation between Lancaster Colony and USANA Health
Given the investment horizon of 90 days Lancaster Colony is expected to generate 1.21 times more return on investment than USANA Health. However, Lancaster Colony is 1.21 times more volatile than USANA Health Sciences. It trades about 0.06 of its potential returns per unit of risk. USANA Health Sciences is currently generating about 0.05 per unit of risk. If you would invest 18,111 in Lancaster Colony on August 29, 2024 and sell it today you would earn a total of 447.00 from holding Lancaster Colony or generate 2.47% 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. USANA Health Sciences
Performance |
| Timeline |
| Lancaster Colony |
| USANA Health Sciences |
Lancaster Colony and USANA Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and USANA Health
The main advantage of trading using opposite Lancaster Colony and USANA Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, USANA Health 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 USANA Health will offset losses from the drop in USANA Health'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 |
| USANA Health vs. J J Snack | USANA Health vs. Lancaster Colony | USANA Health vs. Seneca Foods Corp | USANA Health vs. Seneca Foods Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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