Correlation Between Campbell Soup and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Campbell Soup and Lamb Weston 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 Campbell Soup and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and Lamb Weston Holdings, you can compare the effects of market volatilities on Campbell Soup and Lamb Weston 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 Campbell Soup with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and Lamb Weston.
Diversification Opportunities for Campbell Soup and Lamb Weston
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Campbell and Lamb is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings and Campbell Soup 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 Campbell Soup are associated (or correlated) with Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Campbell Soup i.e., Campbell Soup and Lamb Weston go up and down completely randomly.
Pair Corralation between Campbell Soup and Lamb Weston
Considering the 90-day investment horizon Campbell Soup is expected to generate 0.55 times more return on investment than Lamb Weston. However, Campbell Soup is 1.83 times less risky than Lamb Weston. It trades about -0.03 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.02 per unit of risk. If you would invest 5,074 in Campbell Soup on November 1, 2024 and sell it today you would lose (1,112) from holding Campbell Soup or give up 21.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campbell Soup vs. Lamb Weston Holdings
Performance |
| Timeline |
| Campbell Soup |
| Lamb Weston Holdings |
Campbell Soup and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campbell Soup and Lamb Weston
The main advantage of trading using opposite Campbell Soup and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup position performs unexpectedly, Lamb Weston 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 Lamb Weston will offset losses from the drop in Lamb Weston's long position.| Campbell Soup vs. General Mills | Campbell Soup vs. Hormel Foods | Campbell Soup vs. Kellanova | Campbell Soup vs. Lamb Weston Holdings |
| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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