Correlation Between Hormel Foods and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Hormel Foods 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 Hormel Foods and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and Lamb Weston Holdings, you can compare the effects of market volatilities on Hormel Foods 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 Hormel Foods with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and Lamb Weston.
Diversification Opportunities for Hormel Foods and Lamb Weston
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hormel and Lamb is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods 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 Hormel Foods 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 Hormel Foods 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 Hormel Foods i.e., Hormel Foods and Lamb Weston go up and down completely randomly.
Pair Corralation between Hormel Foods and Lamb Weston
Considering the 90-day investment horizon Hormel Foods is expected to under-perform the Lamb Weston. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.49 times less risky than Lamb Weston. The stock trades about -0.04 of its potential returns per unit of risk. The Lamb Weston Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8,451 in Lamb Weston Holdings on August 28, 2024 and sell it today you would lose (773.00) from holding Lamb Weston Holdings or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. Lamb Weston Holdings
Performance |
| Timeline |
| Hormel Foods |
| Lamb Weston Holdings |
Hormel Foods and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and Lamb Weston
The main advantage of trading using opposite Hormel Foods and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods 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.| Hormel Foods vs. Campbell Soup | Hormel Foods vs. General Mills | Hormel Foods vs. Kellanova | Hormel Foods 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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