Correlation Between Lancaster Colony and J J

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

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

Diversification Opportunities for Lancaster Colony and J J

0.64

Correlation Coefficient

Lancaster Colony  J J

Poor diversification

The 3 months correlation between Lancaster and JJSF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and J J Snack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J J Snack 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 J J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J J Snack has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and J J go up and down completely randomly.

Pair Corralation between Lancaster Colony and J J

Given the investment horizon of 90 days Lancaster Colony is expected to generate 1.22 times more return on investment than J J. However, Lancaster Colony is 1.22 times more volatile than J J Snack. It trades about 0.09 of its potential returns per unit of risk. J J Snack is currently generating about 0.03 per unit of risk. If you would invest  16,992  in Lancaster Colony on September 2, 2024 and sell it today you would earn a total of  1,592  from holding Lancaster Colony or generate 9.37% return on investment over 90 days.

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

Lancaster Colony  vs.  J J Snack

Lancaster Colony

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lancaster Colony may actually be approaching a critical reversion point that can send shares even higher in January 2025.

J J Snack

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J J Snack are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, J J is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lancaster Colony and J J

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

The idea behind Lancaster Colony and J J Snack 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.

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 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.