Correlation Between Lamb Weston and BranchOut Food

Can any of the company-specific risk be diversified away by investing in both Lamb Weston and BranchOut Food 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 BranchOut Food 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 BranchOut Food Common, you can compare the effects of market volatilities on Lamb Weston and BranchOut Food 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 BranchOut Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and BranchOut Food.

Diversification Opportunities for Lamb Weston and BranchOut Food

0.36

Correlation Coefficient

Lamb Weston  BranchOut Food

Weak diversification

The 3 months correlation between Lamb and BranchOut is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and BranchOut Food Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BranchOut Food Common 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 BranchOut Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BranchOut Food Common has no effect on the direction of Lamb Weston i.e., Lamb Weston and BranchOut Food go up and down completely randomly.

Pair Corralation between Lamb Weston and BranchOut Food

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the BranchOut Food. In addition to that, Lamb Weston is 1.39 times more volatile than BranchOut Food Common. It trades about -0.13 of its total potential returns per unit of risk. BranchOut Food Common is currently generating about 0.18 per unit of volatility. 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

Lamb Weston Holdings  vs.  BranchOut Food Common

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.

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.

Pair Trading with Lamb Weston and BranchOut Food

The main advantage of trading using opposite Lamb Weston and BranchOut Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, BranchOut Food 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 BranchOut Food will offset losses from the drop in BranchOut Food's long position.

The idea behind Lamb Weston Holdings and BranchOut Food Common 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.