Correlation Between Lancaster Colony and Farmmi
Can any of the company-specific risk be diversified away by investing in both Lancaster Colony and Farmmi 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 Farmmi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lancaster Colony and Farmmi Inc, you can compare the effects of market volatilities on Lancaster Colony and Farmmi 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 Farmmi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Farmmi.
Diversification Opportunities for Lancaster Colony and Farmmi
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lancaster and Farmmi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Farmmi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmmi Inc 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 Farmmi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmmi Inc has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Farmmi go up and down completely randomly.
Pair Corralation between Lancaster Colony and Farmmi
Given the investment horizon of 90 days Lancaster Colony is expected to generate 0.35 times more return on investment than Farmmi. However, Lancaster Colony is 2.86 times less risky than Farmmi. It trades about -0.34 of its potential returns per unit of risk. Farmmi Inc is currently generating about -0.15 per unit of risk. If you would invest 20,336 in Lancaster Colony on January 20, 2024 and sell it today you would lose (1,649) from holding Lancaster Colony or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lancaster Colony vs. Farmmi Inc
Performance |
| Timeline |
| Lancaster Colony |
| Farmmi Inc |
Lancaster Colony and Farmmi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lancaster Colony and Farmmi
The main advantage of trading using opposite Lancaster Colony and Farmmi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Farmmi 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 Farmmi will offset losses from the drop in Farmmi's long position.| Lancaster Colony vs. Green Globe International | Lancaster Colony vs. Greenlane Holdings | Lancaster Colony vs. 22nd Century Group | Lancaster Colony vs. 1606 Corp |
| Farmmi vs. Green Globe International | Farmmi vs. Greenlane Holdings | Farmmi vs. 22nd Century Group | Farmmi vs. 1606 Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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