Correlation Between Kraft Heinz and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz 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 Kraft Heinz and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Heinz Co and Lamb Weston Holdings, you can compare the effects of market volatilities on Kraft Heinz 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 Kraft Heinz with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and Lamb Weston.
Diversification Opportunities for Kraft Heinz and Lamb Weston
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kraft and Lamb is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co 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 Kraft Heinz 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 Kraft Heinz Co 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 Kraft Heinz i.e., Kraft Heinz and Lamb Weston go up and down completely randomly.
Pair Corralation between Kraft Heinz and Lamb Weston
Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the Lamb Weston. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 1.79 times less risky than Lamb Weston. The stock trades about -0.13 of its potential returns per unit of risk. The Lamb Weston Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6,085 in Lamb Weston Holdings on August 28, 2024 and sell it today you would earn a total of 1,593 from holding Lamb Weston Holdings or generate 26.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Heinz Co vs. Lamb Weston Holdings
Performance |
| Timeline |
| Kraft Heinz |
| Lamb Weston Holdings |
Kraft Heinz and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and Lamb Weston
The main advantage of trading using opposite Kraft Heinz and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz 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.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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