Correlation Between Lamb Weston and Primo Brands
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on Lamb Weston and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Primo Brands.
Diversification Opportunities for Lamb Weston and Primo Brands
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lamb and Primo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Lamb Weston i.e., Lamb Weston and Primo Brands go up and down completely randomly.
Pair Corralation between Lamb Weston and Primo Brands
Allowing for the 90-day total investment horizon Lamb Weston is expected to generate 12.77 times less return on investment than Primo Brands. In addition to that, Lamb Weston is 1.4 times more volatile than Primo Brands. It trades about 0.01 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.09 per unit of volatility. If you would invest 1,427 in Primo Brands on August 30, 2024 and sell it today you would earn a total of 1,435 from holding Primo Brands or generate 100.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Primo Brands
Performance |
| Timeline |
| Lamb Weston Holdings |
| Primo Brands |
Lamb Weston and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Primo Brands
The main advantage of trading using opposite Lamb Weston and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Primo Brands vs. Here Media | Primo Brands vs. Dave Busters Entertainment | Primo Brands vs. Southwest Airlines | Primo Brands vs. Playtech plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |