Correlation Between Lamb Weston and Brasilagro Adr

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

Diversification Opportunities for Lamb Weston and Brasilagro Adr

-0.22

Correlation Coefficient

Lamb Weston  Brasilagro Adr

Very good diversification

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

Pair Corralation between Lamb Weston and Brasilagro Adr

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to generate 3.46 times more return on investment than Brasilagro Adr. However, Lamb Weston is 3.46 times more volatile than Brasilagro Adr. It trades about -0.13 of its potential returns per unit of risk. Brasilagro Adr is currently generating about -0.44 per unit of risk. If you would invest  7,683  in Lamb Weston Holdings on September 27, 2024 and sell it today you would lose (1,170) from holding Lamb Weston Holdings or give up 15.22% of portfolio value over 90 days.

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

Lamb Weston Holdings  vs.  Brasilagro Adr

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.

Brasilagro Adr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brasilagro Adr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lamb Weston and Brasilagro Adr

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

The idea behind Lamb Weston Holdings and Brasilagro Adr 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..