Correlation Between Premier Foods and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Premier Foods and Lamb Weston 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 Premier Foods and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods Plc and Lamb Weston Holdings, you can compare the effects of market volatilities on Premier Foods and Lamb Weston 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 Premier Foods with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Lamb Weston.
Diversification Opportunities for Premier Foods and Lamb Weston
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Premier and Lamb is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods Plc and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings and Premier Foods 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 Premier Foods Plc are associated (or correlated) with Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Premier Foods i.e., Premier Foods and Lamb Weston go up and down completely randomly.
Pair Corralation between Premier Foods and Lamb Weston
If you would invest 208.00 in Premier Foods Plc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Premier Foods Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Premier Foods Plc vs. Lamb Weston Holdings
Performance |
| Timeline |
| Premier Foods Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lamb Weston Holdings |
Premier Foods and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Lamb Weston
The main advantage of trading using opposite Premier Foods and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods position performs unexpectedly, Lamb Weston 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 Lamb Weston will offset losses from the drop in Lamb Weston's long position.| Premier Foods vs. Torque Lifestyle Brands | Premier Foods vs. Naturally Splendid Enterprises | Premier Foods vs. Aryzta AG PK | Premier Foods vs. Premier Foods Plc |
| Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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