Correlation Between Lancaster Colony and Chesapeake Finl

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

By analyzing existing cross correlation between Lancaster Colony and Chesapeake Finl Shs, you can compare the effects of market volatilities on Lancaster Colony and Chesapeake Finl 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 Chesapeake Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lancaster Colony and Chesapeake Finl.

Diversification Opportunities for Lancaster Colony and Chesapeake Finl

-0.4

Correlation Coefficient

Lancaster Colony  Chesapeake Finl

Very good diversification

The 3 months correlation between Lancaster and Chesapeake is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lancaster Colony and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs 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 Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of Lancaster Colony i.e., Lancaster Colony and Chesapeake Finl go up and down completely randomly.

Pair Corralation between Lancaster Colony and Chesapeake Finl

Given the investment horizon of 90 days Lancaster Colony is expected to generate 1.14 times less return on investment than Chesapeake Finl. In addition to that, Lancaster Colony is 1.03 times more volatile than Chesapeake Finl Shs. It trades about 0.15 of its total potential returns per unit of risk. Chesapeake Finl Shs is currently generating about 0.17 per unit of volatility. If you would invest  1,925  in Chesapeake Finl Shs on May 6, 2025 and sell it today you would earn a total of  275.00  from holding Chesapeake Finl Shs or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.9%
Values	Daily Returns

Lancaster Colony  vs.  Chesapeake Finl Shs

Lancaster Colony

Risk-Adjusted Performance

Good

Over the last 90 days Lancaster Colony has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, Lancaster Colony may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Chesapeake Finl Shs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Finl Shs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Chesapeake Finl reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lancaster Colony and Chesapeake Finl

The main advantage of trading using opposite Lancaster Colony and Chesapeake Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lancaster Colony position performs unexpectedly, Chesapeake Finl 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 Chesapeake Finl will offset losses from the drop in Chesapeake Finl's long position.

The idea behind Lancaster Colony and Chesapeake Finl Shs 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.