Correlation Between Lamb Weston and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Consumer Staples 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 Consumer Staples 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 Consumer Staples Portfolio, you can compare the effects of market volatilities on Lamb Weston and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Consumer Staples.
Diversification Opportunities for Lamb Weston and Consumer Staples
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamb and Consumer is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Lamb Weston i.e., Lamb Weston and Consumer Staples go up and down completely randomly.
Pair Corralation between Lamb Weston and Consumer Staples
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Consumer Staples. In addition to that, Lamb Weston is 3.89 times more volatile than Consumer Staples Portfolio. It trades about -0.02 of its total potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.04 per unit of volatility. If you would invest 9,072 in Consumer Staples Portfolio on August 29, 2024 and sell it today you would earn a total of 556.00 from holding Consumer Staples Portfolio or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Lamb Weston Holdings |
| Consumer Staples Por |
Lamb Weston and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Consumer Staples
The main advantage of trading using opposite Lamb Weston and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Consumer Staples vs. Kellanova | Consumer Staples vs. Bunge Limited | Consumer Staples vs. BJs Wholesale Club | Consumer Staples vs. Colgate Palmolive |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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