Correlation Between Lamb Weston and Greencore Group
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Greencore Group 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 Greencore Group 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 Greencore Group PLC, you can compare the effects of market volatilities on Lamb Weston and Greencore Group 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 Greencore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Greencore Group.
Diversification Opportunities for Lamb Weston and Greencore Group
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lamb and Greencore is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Greencore Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencore Group PLC 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 Greencore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencore Group PLC has no effect on the direction of Lamb Weston i.e., Lamb Weston and Greencore Group go up and down completely randomly.
Pair Corralation between Lamb Weston and Greencore Group
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to generate 2.45 times more return on investment than Greencore Group. However, Lamb Weston is 2.45 times more volatile than Greencore Group PLC. It trades about 0.04 of its potential returns per unit of risk. Greencore Group PLC is currently generating about -0.32 per unit of risk. If you would invest 7,746 in Lamb Weston Holdings on September 4, 2024 and sell it today you would earn a total of 88.00 from holding Lamb Weston Holdings or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Greencore Group PLC
Performance |
| Timeline |
| Lamb Weston Holdings |
| Greencore Group PLC |
Lamb Weston and Greencore Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Greencore Group
The main advantage of trading using opposite Lamb Weston and Greencore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Greencore Group 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 Greencore Group will offset losses from the drop in Greencore Group's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Greencore Group vs. National CineMedia | Greencore Group vs. Emerson Radio | Greencore Group vs. BW Offshore Limited | Greencore Group vs. Solstad Offshore ASA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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