Correlation Between Dole PLC and Lamb Weston

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

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

Diversification Opportunities for Dole PLC and Lamb Weston

0.78

Correlation Coefficient

Dole PLC  Lamb Weston

Poor diversification

The 3 months correlation between Dole and Lamb is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dole 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 Dole PLC 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 Dole 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 Dole PLC i.e., Dole PLC and Lamb Weston go up and down completely randomly.

Pair Corralation between Dole PLC and Lamb Weston

Given the investment horizon of 90 days Dole PLC is expected to generate 0.64 times more return on investment than Lamb Weston. However, Dole PLC is 1.57 times less risky than Lamb Weston. It trades about 0.03 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.02 per unit of risk. If you would invest  1,096  in Dole PLC on October 24, 2024 and sell it today you would earn a total of  240.00  from holding Dole PLC or generate 21.9% return on investment over 90 days.

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

Dole PLC  vs.  Lamb Weston Holdings

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Dole PLC and Lamb Weston

The main advantage of trading using opposite Dole PLC and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dole PLC 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 Dole PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.