Correlation Between Lamb Weston and Kellanova

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

Diversification Opportunities for Lamb Weston and Kellanova

-0.89

Correlation Coefficient

Lamb Weston  Kellanova

Pay attention - limited upside

The 3 months correlation between Lamb and Kellanova is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova 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 Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Lamb Weston i.e., Lamb Weston and Kellanova go up and down completely randomly.

Pair Corralation between Lamb Weston and Kellanova

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Kellanova. In addition to that, Lamb Weston is 12.66 times more volatile than Kellanova. It trades about -0.15 of its total potential returns per unit of risk. Kellanova is currently generating about 0.21 per unit of volatility. If you would invest  8,061  in Kellanova on December 27, 2024 and sell it today you would earn a total of  184.00  from holding Kellanova or generate 2.28% return on investment over 90 days.

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

Lamb Weston Holdings  vs.  Kellanova

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.

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lamb Weston and Kellanova

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

The idea behind Lamb Weston Holdings and Kellanova 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.