Correlation Between Lamb Weston and Above Food
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Above Food 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 Lamb Weston and Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lamb Weston Holdings and Above Food Ingredients, you can compare the effects of market volatilities on Lamb Weston and Above Food 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 Lamb Weston with a short position of Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Above Food.
Diversification Opportunities for Lamb Weston and Above Food
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lamb and Above is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients and Lamb Weston 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 Lamb Weston Holdings are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Lamb Weston i.e., Lamb Weston and Above Food go up and down completely randomly.
Pair Corralation between Lamb Weston and Above Food
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Above Food. But the stock apears to be less risky and, when comparing its historical volatility, Lamb Weston Holdings is 2.88 times less risky than Above Food. The stock trades about -0.41 of its potential returns per unit of risk. The Above Food Ingredients is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Above Food Ingredients on November 27, 2024 and sell it today you would earn a total of 8.00 from holding Above Food Ingredients or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Above Food Ingredients
Performance |
| Timeline |
| Lamb Weston Holdings |
| Above Food Ingredients |
Lamb Weston and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Above Food
The main advantage of trading using opposite Lamb Weston and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Above Food vs. Dennys Corp | Above Food vs. LB Foster | Above Food vs. Golden Energy Offshore | Above Food vs. Melco Resorts Entertainment |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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