Correlation Between Lancaster Colony and Naturally Splendid

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

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

Diversification Opportunities for Lancaster Colony and Naturally Splendid

0.0

Correlation Coefficient

Lancaster Colony  Naturally Splendid

Pay attention - limited upside

The 3 months correlation between Lancaster and Naturally is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Naturally Splendid Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturally Splendid 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 Naturally Splendid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturally Splendid has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Naturally Splendid go up and down completely randomly.

Pair Corralation between Lancaster Colony and Naturally Splendid

If you would invest  17,228  in Lancaster Colony on December 30, 2024 and sell it today you would earn a total of  251.00  from holding Lancaster Colony or generate 1.46% return on investment over 90 days.

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

Lancaster Colony  vs.  Naturally Splendid Enterprises

Lancaster Colony

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 1 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Naturally Splendid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Naturally Splendid Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Naturally Splendid is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lancaster Colony and Naturally Splendid

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

The idea behind Lancaster Colony and Naturally Splendid Enterprises 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.