Correlation Between Lamb Weston and Seaboard

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

Diversification Opportunities for Lamb Weston and Seaboard

-0.2

Correlation Coefficient

Lamb Weston  Seaboard

Good diversification

The 3 months correlation between Lamb and Seaboard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Seaboard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaboard 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 Seaboard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaboard has no effect on the direction of Lamb Weston i.e., Lamb Weston and Seaboard go up and down completely randomly.

Pair Corralation between Lamb Weston and Seaboard

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Seaboard. In addition to that, Lamb Weston is 1.6 times more volatile than Seaboard. It trades about -0.17 of its total potential returns per unit of risk. Seaboard is currently generating about 0.07 per unit of volatility. If you would invest  261,193  in Seaboard on November 28, 2024 and sell it today you would earn a total of  22,128  from holding Seaboard or generate 8.47% return on investment over 90 days.

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

Lamb Weston Holdings  vs.  Seaboard

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 March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Seaboard

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Seaboard may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Lamb Weston and Seaboard

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

The idea behind Lamb Weston Holdings and Seaboard 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.