Correlation Between Lamb Weston and Post Holdings
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Post Holdings 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 Post Holdings 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 Post Holdings, you can compare the effects of market volatilities on Lamb Weston and Post Holdings 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 Post Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Post Holdings.
Diversification Opportunities for Lamb Weston and Post Holdings
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lamb and Post is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Post Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings has no effect on the direction of Lamb Weston i.e., Lamb Weston and Post Holdings go up and down completely randomly.
Pair Corralation between Lamb Weston and Post Holdings
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Post Holdings. In addition to that, Lamb Weston is 2.65 times more volatile than Post Holdings. It trades about -0.03 of its total potential returns per unit of risk. Post Holdings is currently generating about 0.11 per unit of volatility. If you would invest 9,287 in Post Holdings on August 28, 2024 and sell it today you would earn a total of 2,495 from holding Post Holdings or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Post Holdings
Performance |
| Timeline |
| Lamb Weston Holdings |
| Post Holdings |
Lamb Weston and Post Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Post Holdings
The main advantage of trading using opposite Lamb Weston and Post Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Post Holdings 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 Post Holdings will offset losses from the drop in Post Holdings' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Post Holdings vs. Simply Good Foods | Post Holdings vs. Treehouse Foods | Post Holdings vs. J J Snack | Post Holdings vs. Central Garden Pet |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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