Correlation Between Everest Consolidator and Lamb Weston

Can any of the company-specific risk be diversified away by investing in both Everest Consolidator and Lamb Weston 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 Everest Consolidator and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everest Consolidator Acquisition and Lamb Weston Holdings, you can compare the effects of market volatilities on Everest Consolidator and Lamb Weston 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 Everest Consolidator with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everest Consolidator and Lamb Weston.

Diversification Opportunities for Everest Consolidator and Lamb Weston

-0.57

Correlation Coefficient

Everest Consolidator  Lamb Weston

Excellent diversification

The 3 months correlation between Everest and Lamb is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Everest Consolidator Acquisiti and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings and Everest Consolidator 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 Everest Consolidator Acquisition are associated (or correlated) with Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Everest Consolidator i.e., Everest Consolidator and Lamb Weston go up and down completely randomly.

Pair Corralation between Everest Consolidator and Lamb Weston

Given the investment horizon of 90 days Everest Consolidator is expected to generate 2.31 times less return on investment than Lamb Weston. But when comparing it to its historical volatility, Everest Consolidator Acquisition is 8.62 times less risky than Lamb Weston. It trades about 0.13 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,688  in Lamb Weston Holdings on January 29, 2024 and sell it today you would earn a total of  1,697  from holding Lamb Weston Holdings or generate 25.37% return on investment over 90 days.

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

Everest Consolidator Acquisiti  vs.  Lamb Weston Holdings

Everest Consolidator

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Consolidator Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Everest Consolidator is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Lamb Weston Holdings

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Everest Consolidator and Lamb Weston

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

The idea behind Everest Consolidator Acquisition and Lamb Weston Holdings 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.