Correlation Between Lamb Weston and ConAgra Foods
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods, you can compare the effects of market volatilities on Lamb Weston and ConAgra Foods 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 ConAgra Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and ConAgra Foods.
Diversification Opportunities for Lamb Weston and ConAgra Foods
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lamb and ConAgra is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and ConAgra Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConAgra Foods 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 ConAgra Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConAgra Foods has no effect on the direction of Lamb Weston i.e., Lamb Weston and ConAgra Foods go up and down completely randomly.
Pair Corralation between Lamb Weston and ConAgra Foods
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the ConAgra Foods. In addition to that, Lamb Weston is 1.94 times more volatile than ConAgra Foods. It trades about -0.02 of its total potential returns per unit of risk. ConAgra Foods is currently generating about -0.03 per unit of volatility. If you would invest 3,199 in ConAgra Foods on November 1, 2024 and sell it today you would lose (570.00) from holding ConAgra Foods or give up 17.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. ConAgra Foods
Performance |
| Timeline |
| Lamb Weston Holdings |
| ConAgra Foods |
Lamb Weston and ConAgra Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and ConAgra Foods
The main advantage of trading using opposite Lamb Weston and ConAgra Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, ConAgra Foods 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 ConAgra Foods will offset losses from the drop in ConAgra Foods' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| ConAgra Foods vs. Kellanova | ConAgra Foods vs. General Mills | ConAgra Foods vs. JM Smucker | ConAgra Foods vs. Hormel Foods |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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