Correlation Between Lamb Weston and Glanbia Plc

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

Diversification Opportunities for Lamb Weston and Glanbia Plc

-0.62

Correlation Coefficient

Lamb Weston  Glanbia Plc

Excellent diversification

The 3 months correlation between Lamb and Glanbia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Glanbia plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia plc 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 Glanbia Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia plc has no effect on the direction of Lamb Weston i.e., Lamb Weston and Glanbia Plc go up and down completely randomly.

Pair Corralation between Lamb Weston and Glanbia Plc

Allowing for the 90-day total investment horizon Lamb Weston is expected to generate 2.93 times less return on investment than Glanbia Plc. In addition to that, Lamb Weston is 1.39 times more volatile than Glanbia plc. It trades about 0.01 of its total potential returns per unit of risk. Glanbia plc is currently generating about 0.03 per unit of volatility. If you would invest  1,274  in Glanbia plc on September 19, 2024 and sell it today you would earn a total of  206.00  from holding Glanbia plc or generate 16.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.52%
Values	Daily Returns

Lamb Weston Holdings  vs.  Glanbia plc

Lamb Weston Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lamb Weston Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Lamb Weston showed solid returns over the last few months and may actually be approaching a breakup point.

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lamb Weston and Glanbia Plc

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

The idea behind Lamb Weston Holdings and Glanbia plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.