Correlation Between Edible Garden and Lamb Weston

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

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

Diversification Opportunities for Edible Garden and Lamb Weston

0.25

Correlation Coefficient

Edible Garden  Lamb Weston

Modest diversification

The 3 months correlation between Edible and Lamb is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Edible Garden AG 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 Edible Garden 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 Edible Garden AG 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 Edible Garden i.e., Edible Garden and Lamb Weston go up and down completely randomly.

Pair Corralation between Edible Garden and Lamb Weston

Given the investment horizon of 90 days Edible Garden AG is expected to generate 4.03 times more return on investment than Lamb Weston. However, Edible Garden is 4.03 times more volatile than Lamb Weston Holdings. It trades about 0.02 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.16 per unit of risk. If you would invest  360.00  in Edible Garden AG on December 18, 2024 and sell it today you would lose (99.00) from holding Edible Garden AG or give up 27.5% of portfolio value over 90 days.

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

Edible Garden AG  vs.  Lamb Weston Holdings

Edible Garden AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edible Garden AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Edible Garden disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lamb Weston Holdings

Risk-Adjusted Performance

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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Edible Garden and Lamb Weston

The main advantage of trading using opposite Edible Garden and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edible Garden 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 Edible Garden AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.