Correlation Between Lamb Weston and Seneca Foods
Can any of the company-specific risk be diversified away by investing in both Lamb Weston and Seneca Foods 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 Seneca Foods 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 Seneca Foods Corp, you can compare the effects of market volatilities on Lamb Weston and Seneca Foods 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 Seneca Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lamb Weston and Seneca Foods.
Diversification Opportunities for Lamb Weston and Seneca Foods
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lamb and Seneca is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lamb Weston Holdings and Seneca Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seneca Foods Corp 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 Seneca Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seneca Foods Corp has no effect on the direction of Lamb Weston i.e., Lamb Weston and Seneca Foods go up and down completely randomly.
Pair Corralation between Lamb Weston and Seneca Foods
Allowing for the 90-day total investment horizon Lamb Weston Holdings is expected to under-perform the Seneca Foods. In addition to that, Lamb Weston is 2.06 times more volatile than Seneca Foods Corp. It trades about -0.21 of its total potential returns per unit of risk. Seneca Foods Corp is currently generating about 0.09 per unit of volatility. If you would invest 5,740 in Seneca Foods Corp on January 30, 2024 and sell it today you would earn a total of 162.00 from holding Seneca Foods Corp or generate 2.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 76.19% |
Values | Daily Returns |
Lamb Weston Holdings vs. Seneca Foods Corp
Performance |
Timeline |
Lamb Weston Holdings |
Seneca Foods Corp |
Lamb Weston and Seneca Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lamb Weston and Seneca Foods
The main advantage of trading using opposite Lamb Weston and Seneca Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lamb Weston position performs unexpectedly, Seneca Foods 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 Seneca Foods will offset losses from the drop in Seneca Foods' long position.Lamb Weston vs. Golden Agri Resources | Lamb Weston vs. Local Bounti Corp | Lamb Weston vs. Fresh Del Monte | Lamb Weston vs. Alico Inc |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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