Correlation Between Lamb Weston and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Kraft Heinz 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 Kraft Heinz 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 Kraft Heinz Co, you can compare the effects of market volatilities on Lamb Weston and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Kraft Heinz.
Diversification Opportunities for Lamb Weston and Kraft Heinz
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamb and Kraft is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Lamb Weston i.e., Lamb Weston and Kraft Heinz go up and down completely randomly.
Pair Corralation between Lamb Weston and Kraft Heinz
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to generate 1.37 times more return on investment than Kraft Heinz. However, Lamb Weston is 1.37 times more volatile than Kraft Heinz Co. It trades about -0.01 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.35 per unit of risk. If you would invest 7,729 in Lamb Weston Holdings on August 28, 2024 and sell it today you would lose (51.00) from holding Lamb Weston Holdings or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Kraft Heinz Co
Performance |
| Timeline |
| Lamb Weston Holdings |
| Kraft Heinz |
Lamb Weston and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Kraft Heinz
The main advantage of trading using opposite Lamb Weston and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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