Correlation Between Lamb Weston and JM Smucker
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and JM Smucker 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 JM Smucker 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 JM Smucker, you can compare the effects of market volatilities on Lamb Weston and JM Smucker 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 JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and JM Smucker.
Diversification Opportunities for Lamb Weston and JM Smucker
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamb and SJM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Lamb Weston i.e., Lamb Weston and JM Smucker go up and down completely randomly.
Pair Corralation between Lamb Weston and JM Smucker
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to generate 1.26 times more return on investment than JM Smucker. However, Lamb Weston is 1.26 times more volatile than JM Smucker. It trades about 0.01 of its potential returns per unit of risk. JM Smucker is currently generating about -0.08 per unit of risk. If you would invest 7,679 in Lamb Weston Holdings on August 24, 2024 and sell it today you would lose (4.00) from holding Lamb Weston Holdings or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. JM Smucker
Performance |
| Timeline |
| Lamb Weston Holdings |
| JM Smucker |
Lamb Weston and JM Smucker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and JM Smucker
The main advantage of trading using opposite Lamb Weston and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| JM Smucker vs. ConAgra Foods | JM Smucker vs. Kellanova | JM Smucker vs. General Mills | JM Smucker vs. Hormel 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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