Correlation Between Lancaster Colony and SunOpta

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

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

Diversification Opportunities for Lancaster Colony and SunOpta

-0.19

Correlation Coefficient

Lancaster Colony  SunOpta

Good diversification

The 3 months correlation between Lancaster and SunOpta is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and SunOpta go up and down completely randomly.

Pair Corralation between Lancaster Colony and SunOpta

Given the investment horizon of 90 days Lancaster Colony is expected to generate 0.63 times more return on investment than SunOpta. However, Lancaster Colony is 1.58 times less risky than SunOpta. It trades about 0.02 of its potential returns per unit of risk. SunOpta is currently generating about -0.25 per unit of risk. 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	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lancaster Colony  vs.  SunOpta

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.

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lancaster Colony and SunOpta

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

The idea behind Lancaster Colony and SunOpta 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.