Correlation Between Lamb Weston and Natures Sunshine
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Natures Sunshine 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 Natures Sunshine 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 Natures Sunshine Products, you can compare the effects of market volatilities on Lamb Weston and Natures Sunshine 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 Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Natures Sunshine.
Diversification Opportunities for Lamb Weston and Natures Sunshine
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamb and Natures is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products 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 Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of Lamb Weston i.e., Lamb Weston and Natures Sunshine go up and down completely randomly.
Pair Corralation between Lamb Weston and Natures Sunshine
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Natures Sunshine. But the stock apears to be less risky and, when comparing its historical volatility, Lamb Weston Holdings is 1.02 times less risky than Natures Sunshine. The stock trades about -0.01 of its potential returns per unit of risk. The Natures Sunshine Products is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,507 in Natures Sunshine Products on August 30, 2024 and sell it today you would earn a total of 108.00 from holding Natures Sunshine Products or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Natures Sunshine Products
Performance |
| Timeline |
| Lamb Weston Holdings |
| Natures Sunshine Products |
Lamb Weston and Natures Sunshine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Natures Sunshine
The main advantage of trading using opposite Lamb Weston and Natures Sunshine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Natures Sunshine 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 Natures Sunshine will offset losses from the drop in Natures Sunshine's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Natures Sunshine vs. ELF Beauty | Natures Sunshine vs. Procter Gamble | Natures Sunshine vs. Colgate Palmolive | Natures Sunshine vs. Kenvue Inc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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