Correlation Between Lamb Weston and Mamas Creations
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Mamas Creations 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 Mamas Creations 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 Mamas Creations, you can compare the effects of market volatilities on Lamb Weston and Mamas Creations 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 Mamas Creations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Mamas Creations.
Diversification Opportunities for Lamb Weston and Mamas Creations
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lamb and Mamas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of Lamb Weston i.e., Lamb Weston and Mamas Creations go up and down completely randomly.
Pair Corralation between Lamb Weston and Mamas Creations
Allowing for the 90-day total investment horizon Lamb Weston is expected to generate 1.51 times less return on investment than Mamas Creations. But when comparing it to its historical volatility, Lamb Weston Holdings is 1.33 times less risky than Mamas Creations. It trades about 0.15 of its potential returns per unit of risk. Mamas Creations is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 819.00 in Mamas Creations on September 5, 2024 and sell it today you would earn a total of 165.00 from holding Mamas Creations or generate 20.15% 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. Mamas Creations
Performance |
| Timeline |
| Lamb Weston Holdings |
| Mamas Creations |
Lamb Weston and Mamas Creations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Mamas Creations
The main advantage of trading using opposite Lamb Weston and Mamas Creations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Mamas Creations 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 Mamas Creations will offset losses from the drop in Mamas Creations' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Mamas Creations vs. Hormel Foods | Mamas Creations vs. McCormick Company Incorporated | Mamas Creations vs. Lamb Weston Holdings | Mamas Creations vs. JM Smucker |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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