Correlation Between Lancaster Colony and Better Choice

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Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Better Choice 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 Better Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony Cor and Better Choice, you can compare the effects of market volatilities on Lancaster Colony and Better Choice 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 Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Better Choice.

Diversification Opportunities for Lancaster Colony and Better Choice

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Lancaster and Better is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony Cor and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice 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 Cor are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Better Choice go up and down completely randomly.

Pair Corralation between Lancaster Colony and Better Choice

Given the investment horizon of 90 days Lancaster Colony Cor is expected to generate 0.29 times more return on investment than Better Choice. However, Lancaster Colony Cor is 3.47 times less risky than Better Choice. It trades about -0.01 of its potential returns per unit of risk. Better Choice is currently generating about -0.02 per unit of risk. If you would invest  17,741  in Lancaster Colony Cor on July 2, 2022 and sell it today you would lose (2,535)  from holding Lancaster Colony Cor or give up 14.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Lancaster Colony Cor  vs.  Better Choice

 Performance (%) 
       Timeline  
Lancaster Colony Cor 
Lancaster Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony Cor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Lancaster Colony sustained solid returns over the last few months and may actually be approaching a breakup point.

Lancaster Price Channel

Better Choice 
Better Performance
0 of 100
Over the last 90 days Better Choice has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Better Price Channel

Lancaster Colony and Better Choice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lancaster Colony and Better Choice

The main advantage of trading using opposite Lancaster Colony and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.
Lancaster Colony vs. Amazon Inc
The idea behind Lancaster Colony Cor and Better Choice 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.
Better Choice vs. Amazon Inc
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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