Correlation Between Post Holdings and Lancaster Colony
Can any of the company-specific risk be diversified away by investing in both Post Holdings and Lancaster Colony 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 Post Holdings and Lancaster Colony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post Holdings and Lancaster Colony, you can compare the effects of market volatilities on Post Holdings and Lancaster Colony 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 Post Holdings with a short position of Lancaster Colony. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post Holdings and Lancaster Colony.
Diversification Opportunities for Post Holdings and Lancaster Colony
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Post and Lancaster is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Post Holdings and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Post Holdings 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 Post Holdings are associated (or correlated) with Lancaster Colony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancaster Colony has no effect on the direction of Post Holdings i.e., Post Holdings and Lancaster Colony go up and down completely randomly.
Pair Corralation between Post Holdings and Lancaster Colony
Given the investment horizon of 90 days Post Holdings is expected to under-perform the Lancaster Colony. But the stock apears to be less risky and, when comparing its historical volatility, Post Holdings is 1.1 times less risky than Lancaster Colony. The stock trades about -0.19 of its potential returns per unit of risk. The Lancaster Colony is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 17,255 in Lancaster Colony on November 2, 2024 and sell it today you would lose (413.50) from holding Lancaster Colony or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Post Holdings vs. Lancaster Colony
Performance |
| Timeline |
| Post Holdings |
| Lancaster Colony |
Post Holdings and Lancaster Colony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post Holdings and Lancaster Colony
The main advantage of trading using opposite Post Holdings and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post Holdings position performs unexpectedly, Lancaster Colony 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 Lancaster Colony will offset losses from the drop in Lancaster Colony's long position.| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
| Lancaster Colony vs. Treehouse Foods | Lancaster Colony vs. John B Sanfilippo | Lancaster Colony vs. Seneca Foods Corp | Lancaster Colony vs. J J Snack |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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