Correlation Between Utz Brands and Lancaster Colony

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

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

Diversification Opportunities for Utz Brands and Lancaster Colony

0.07

Correlation Coefficient

Utz Brands  Lancaster Colony

Significant diversification

The 3 months correlation between Utz and Lancaster is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Utz Brands and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Utz Brands 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 Utz Brands 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 Utz Brands i.e., Utz Brands and Lancaster Colony go up and down completely randomly.

Pair Corralation between Utz Brands and Lancaster Colony

Considering the 90-day investment horizon Utz Brands is expected to under-perform the Lancaster Colony. In addition to that, Utz Brands is 1.23 times more volatile than Lancaster Colony. It trades about -0.01 of its total potential returns per unit of risk. Lancaster Colony is currently generating about 0.09 per unit of volatility. If you would invest  16,992  in Lancaster Colony on August 31, 2024 and sell it today you would earn a total of  1,613  from holding Lancaster Colony or generate 9.49% return on investment over 90 days.

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

Utz Brands  vs.  Lancaster Colony

Utz Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utz Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Utz Brands is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 December 2024.

Pair Trading with Utz Brands and Lancaster Colony

The main advantage of trading using opposite Utz Brands and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Utz Brands 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.

The idea behind Utz Brands and Lancaster Colony 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.