Correlation Between Lamb Weston and Tootsie Roll
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Tootsie Roll 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 Tootsie Roll 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 Tootsie Roll Industries, you can compare the effects of market volatilities on Lamb Weston and Tootsie Roll 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 Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Tootsie Roll.
Diversification Opportunities for Lamb Weston and Tootsie Roll
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lamb and Tootsie is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries 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 Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Lamb Weston i.e., Lamb Weston and Tootsie Roll go up and down completely randomly.
Pair Corralation between Lamb Weston and Tootsie Roll
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Tootsie Roll. In addition to that, Lamb Weston is 2.0 times more volatile than Tootsie Roll Industries. It trades about -0.16 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about 0.04 per unit of volatility. If you would invest 3,073 in Tootsie Roll Industries on December 18, 2024 and sell it today you would earn a total of 90.00 from holding Tootsie Roll Industries or generate 2.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lamb Weston Holdings vs. Tootsie Roll Industries
Performance |
Timeline |
Lamb Weston Holdings |
Tootsie Roll Industries |
Lamb Weston and Tootsie Roll Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamb Weston and Tootsie Roll
The main advantage of trading using opposite Lamb Weston and Tootsie Roll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Tootsie Roll 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 Tootsie Roll will offset losses from the drop in Tootsie Roll's long position.Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy, | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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