Correlation Between Ingredion Incorporated and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated 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 Ingredion Incorporated and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and Lamb Weston Holdings, you can compare the effects of market volatilities on Ingredion Incorporated 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 Ingredion Incorporated with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and Lamb Weston.
Diversification Opportunities for Ingredion Incorporated and Lamb Weston
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ingredion and Lamb is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated i.e., Ingredion Incorporated and Lamb Weston go up and down completely randomly.
Pair Corralation between Ingredion Incorporated and Lamb Weston
Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 2.25 times more return on investment than Lamb Weston. However, Ingredion Incorporated is 2.25 times more volatile than Lamb Weston Holdings. It trades about 0.14 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about 0.01 per unit of risk. If you would invest 13,377 in Ingredion Incorporated on September 2, 2024 and sell it today you would earn a total of 1,357 from holding Ingredion Incorporated or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingredion Incorporated vs. Lamb Weston Holdings
Performance |
| Timeline |
| Ingredion Incorporated |
| Lamb Weston Holdings |
Ingredion Incorporated and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingredion Incorporated and Lamb Weston
The main advantage of trading using opposite Ingredion Incorporated and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated 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.| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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