Correlation Between Lancaster Colony and ConAgra Foods

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

Diversification Opportunities for Lancaster Colony and ConAgra Foods

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Lancaster and ConAgra is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods 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 ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and ConAgra Foods go up and down completely randomly.

Pair Corralation between Lancaster Colony and ConAgra Foods

Given the investment horizon of 90 days Lancaster Colony is expected to generate 1.39 times more return on investment than ConAgra Foods. However, Lancaster Colony is 1.39 times more volatile than ConAgra Foods. It trades about 0.05 of its potential returns per unit of risk. ConAgra Foods is currently generating about -0.01 per unit of risk. If you would invest  14,939  in Lancaster Colony on December 30, 2023 and sell it today you would earn a total of  5,824  from holding Lancaster Colony or generate 38.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lancaster Colony  vs.  ConAgra Foods

 Performance 
       Timeline  
Lancaster Colony 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Lancaster Colony exhibited solid returns over the last few months and may actually be approaching a breakup point.
ConAgra Foods 

Risk-Adjusted Performance

2 of 100

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

Lancaster Colony and ConAgra Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lancaster Colony and ConAgra Foods

The main advantage of trading using opposite Lancaster Colony and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.
The idea behind Lancaster Colony and ConAgra Foods 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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