Correlation Between Lamb Weston and JM Smucker

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

Diversification Opportunities for Lamb Weston and JM Smucker

-0.31

Correlation Coefficient

Lamb Weston  JM Smucker

Very good diversification

The 3 months correlation between Lamb and SJM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Lamb Weston i.e., Lamb Weston and JM Smucker go up and down completely randomly.

Pair Corralation between Lamb Weston and JM Smucker

Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the JM Smucker. In addition to that, Lamb Weston is 1.28 times more volatile than JM Smucker. It trades about -0.15 of its total potential returns per unit of risk. JM Smucker is currently generating about 0.02 per unit of volatility. If you would invest  10,948  in JM Smucker on December 27, 2024 and sell it today you would earn a total of  187.00  from holding JM Smucker or generate 1.71% 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.  JM Smucker

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.

JM Smucker

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JM Smucker are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking indicators, JM Smucker is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lamb Weston and JM Smucker

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

The idea behind Lamb Weston Holdings and JM Smucker 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.