Correlation Between SSMTF and Lancaster Colony

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

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

Diversification Opportunities for SSMTF and Lancaster Colony

0.0

Correlation Coefficient

SSMTF  Lancaster Colony

Pay attention - limited upside

The 3 months correlation between SSMTF and Lancaster is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SSMTF and Lancaster Colony in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancaster Colony and SSMTF 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 SSMTF 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 SSMTF i.e., SSMTF and Lancaster Colony go up and down completely randomly.

Pair Corralation between SSMTF and Lancaster Colony

If you would invest  16,591  in Lancaster Colony on January 9, 2025 and sell it today you would earn a total of  1,535  from holding Lancaster Colony or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

SSMTF  vs.  Lancaster Colony

SSMTF

Risk-Adjusted Performance

Very Weak

Over the last 90 days SSMTF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSMTF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lancaster Colony

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lancaster Colony are ranked lower than 6 (%) 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 SSMTF and Lancaster Colony

The main advantage of trading using opposite SSMTF and Lancaster Colony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSMTF 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 SSMTF 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.