Correlation Between Aryzta AG and Lancaster Colony

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

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

Diversification Opportunities for Aryzta AG and Lancaster Colony

0.48

Correlation Coefficient

Aryzta AG  Lancaster Colony

Very weak diversification

The 3 months correlation between Aryzta and Lancaster is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and Aryzta AG 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 Aryzta AG PK 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 Aryzta AG i.e., Aryzta AG and Lancaster Colony go up and down completely randomly.

Pair Corralation between Aryzta AG and Lancaster Colony

Assuming the 90 days horizon Aryzta AG PK is expected to under-perform the Lancaster Colony. In addition to that, Aryzta AG is 4.83 times more volatile than Lancaster Colony. It trades about -0.12 of its total potential returns per unit of risk. Lancaster Colony is currently generating about -0.22 per unit of volatility. If you would invest  19,249  in Lancaster Colony on January 6, 2025 and sell it today you would lose (1,269) from holding Lancaster Colony or give up 6.59% of portfolio value over 90 days.

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

Aryzta AG PK  vs.  Lancaster Colony

Aryzta AG PK

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aryzta AG PK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Aryzta AG showed solid returns over the last few months and may actually be approaching a breakup point.

Lancaster Colony

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 5 (%) 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 May 2025.

Pair Trading with Aryzta AG and Lancaster Colony

The main advantage of trading using opposite Aryzta AG and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG 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 Aryzta AG PK 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.