Correlation Between Lamb Weston and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Lamb Weston and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Natural Alternatives.
Diversification Opportunities for Lamb Weston and Natural Alternatives
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lamb and Natural is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Lamb Weston i.e., Lamb Weston and Natural Alternatives go up and down completely randomly.
Pair Corralation between Lamb Weston and Natural Alternatives
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Natural Alternatives. But the stock apears to be less risky and, when comparing its historical volatility, Lamb Weston Holdings is 1.07 times less risky than Natural Alternatives. The stock trades about -0.03 of its potential returns per unit of risk. The Natural Alternatives International is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 590.00 in Natural Alternatives International on September 1, 2024 and sell it today you would lose (121.00) from holding Natural Alternatives International or give up 20.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Natural Alternatives Internati
Performance |
| Timeline |
| Lamb Weston Holdings |
| Natural Alternatives |
Lamb Weston and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Natural Alternatives
The main advantage of trading using opposite Lamb Weston and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Natural Alternatives vs. Seneca Foods Corp | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Central Garden Pet | Natural Alternatives vs. Lifeway 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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