Correlation Between Lamb Weston and Calbee

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

Diversification Opportunities for Lamb Weston and Calbee

-0.22

Correlation Coefficient

Lamb Weston  Calbee

Very good diversification

The 3 months correlation between Lamb and Calbee is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Calbee Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calbee Inc 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 Calbee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calbee Inc has no effect on the direction of Lamb Weston i.e., Lamb Weston and Calbee go up and down completely randomly.

Pair Corralation between Lamb Weston and Calbee

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Calbee. In addition to that, Lamb Weston is 2.98 times more volatile than Calbee Inc. It trades about -0.13 of its total potential returns per unit of risk. Calbee Inc is currently generating about -0.13 per unit of volatility. If you would invest  533.00  in Calbee Inc on October 4, 2024 and sell it today you would lose (25.00) from holding Calbee Inc or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Lamb Weston Holdings  vs.  Calbee Inc

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.

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lamb Weston and Calbee

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

The idea behind Lamb Weston Holdings and Calbee Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.