Correlation Between BranchOut Food and Lamb Weston

Can any of the company-specific risk be diversified away by investing in both BranchOut Food 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 BranchOut Food and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BranchOut Food Common and Lamb Weston Holdings, you can compare the effects of market volatilities on BranchOut Food 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 BranchOut Food with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of BranchOut Food and Lamb Weston.

Diversification Opportunities for BranchOut Food and Lamb Weston

0.36

Correlation Coefficient

BranchOut Food  Lamb Weston

Weak diversification

The 3 months correlation between BranchOut and Lamb is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding BranchOut Food Common 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 BranchOut Food 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 BranchOut Food Common 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 BranchOut Food i.e., BranchOut Food and Lamb Weston go up and down completely randomly.

Pair Corralation between BranchOut Food and Lamb Weston

Considering the 90-day investment horizon BranchOut Food Common is expected to generate 0.72 times more return on investment than Lamb Weston. However, BranchOut Food Common is 1.39 times less risky than Lamb Weston. It trades about 0.18 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.13 per unit of risk. If you would invest  170.00  in BranchOut Food Common on October 6, 2024 and sell it today you would earn a total of  22.00  from holding BranchOut Food Common or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BranchOut Food Common  vs.  Lamb Weston Holdings

BranchOut Food Common

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BranchOut Food Common are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, BranchOut Food reported solid returns over the last few months and may actually be approaching a breakup point.

Lamb Weston Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lamb Weston Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lamb Weston is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BranchOut Food and Lamb Weston

The main advantage of trading using opposite BranchOut Food and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BranchOut Food 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.

The idea behind BranchOut Food Common and Lamb Weston Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.