Correlation Between Lancaster Colony and Utz Brands
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Utz Brands 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 Utz Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Utz Brands, you can compare the effects of market volatilities on Lancaster Colony and Utz Brands 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 Utz Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Utz Brands.
Diversification Opportunities for Lancaster Colony and Utz Brands
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lancaster and Utz is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Utz Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utz Brands 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 Utz Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utz Brands has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Utz Brands go up and down completely randomly.
Pair Corralation between Lancaster Colony and Utz Brands
Given the investment horizon of 90 days Lancaster Colony is expected to generate 0.79 times more return on investment than Utz Brands. However, Lancaster Colony is 1.27 times less risky than Utz Brands. It trades about 0.0 of its potential returns per unit of risk. Utz Brands is currently generating about -0.01 per unit of risk. If you would invest 18,591 in Lancaster Colony on November 2, 2024 and sell it today you would lose (1,663) from holding Lancaster Colony or give up 8.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Utz Brands
Performance |
| Timeline |
| Lancaster Colony |
| Utz Brands |
Lancaster Colony and Utz Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Utz Brands
The main advantage of trading using opposite Lancaster Colony and Utz Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Utz Brands 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 Utz Brands will offset losses from the drop in Utz Brands' long position.| Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. John B Sanfilippo | Lancaster Colony vs. Seneca Foods Corp | Lancaster Colony vs. J J Snack |
| Utz Brands vs. Post Holdings | Utz Brands vs. J J Snack | Utz Brands vs. The Hain Celestial | Utz Brands vs. Bellring Brands LLC |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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