Correlation Between Lamb Weston and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee, you can compare the effects of market volatilities on Lamb Weston and Westrock Coffee 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 Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Westrock Coffee.
Diversification Opportunities for Lamb Weston and Westrock Coffee
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lamb and Westrock is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Lamb Weston i.e., Lamb Weston and Westrock Coffee go up and down completely randomly.
Pair Corralation between Lamb Weston and Westrock Coffee
Allowing for the 90-day total investment horizon Lamb Weston is expected to generate 42.09 times less return on investment than Westrock Coffee. But when comparing it to its historical volatility, Lamb Weston Holdings is 2.05 times less risky than Westrock Coffee. It trades about 0.01 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 699.00 in Westrock Coffee on August 24, 2024 and sell it today you would earn a total of 68.00 from holding Westrock Coffee or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lamb Weston Holdings vs. Westrock Coffee
Performance |
| Timeline |
| Lamb Weston Holdings |
| Westrock Coffee |
Lamb Weston and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lamb Weston and Westrock Coffee
The main advantage of trading using opposite Lamb Weston and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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