Correlation Between Lancaster Colony and Ispire Technology

Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Ispire Technology 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 Ispire Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lancaster Colony and Ispire Technology Common, you can compare the effects of market volatilities on Lancaster Colony and Ispire Technology 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 Ispire Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Ispire Technology.

Diversification Opportunities for Lancaster Colony and Ispire Technology

-0.26

Correlation Coefficient

Lancaster Colony  Ispire Technology

Very good diversification

The 3 months correlation between Lancaster and Ispire is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Ispire Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ispire Technology Common 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 Ispire Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ispire Technology Common has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Ispire Technology go up and down completely randomly.

Pair Corralation between Lancaster Colony and Ispire Technology

Given the investment horizon of 90 days Lancaster Colony is expected to generate 0.49 times more return on investment than Ispire Technology. However, Lancaster Colony is 2.03 times less risky than Ispire Technology. It trades about 0.02 of its potential returns per unit of risk. Ispire Technology Common is currently generating about -0.02 per unit of risk. If you would invest  17,630  in Lancaster Colony on September 25, 2024 and sell it today you would earn a total of  162.00  from holding Lancaster Colony or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lancaster Colony  vs.  Ispire Technology Common

Lancaster Colony

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Lancaster Colony is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ispire Technology Common

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ispire Technology Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Ispire Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Lancaster Colony and Ispire Technology

The main advantage of trading using opposite Lancaster Colony and Ispire Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Ispire Technology 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 Ispire Technology will offset losses from the drop in Ispire Technology's long position.

The idea behind Lancaster Colony and Ispire Technology Common pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.