Correlation Between Lamb Weston and Apple
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Lamb Weston and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Apple.
Diversification Opportunities for Lamb Weston and Apple
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lamb and Apple is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Lamb Weston i.e., Lamb Weston and Apple go up and down completely randomly.
Pair Corralation between Lamb Weston and Apple
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Apple. In addition to that, Lamb Weston is 3.13 times more volatile than Apple Inc. It trades about -0.21 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.01 per unit of volatility. If you would invest 16,971 in Apple Inc on January 26, 2024 and sell it today you would lose (69.00) from holding Apple Inc or give up 0.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lamb Weston Holdings vs. Apple Inc
Performance |
Timeline |
Lamb Weston Holdings |
Apple Inc |
Lamb Weston and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamb Weston and Apple
The main advantage of trading using opposite Lamb Weston and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy Common Stock | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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