Correlation Between BRF SA and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both BRF SA 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 BRF SA and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA ADR and Lamb Weston Holdings, you can compare the effects of market volatilities on BRF SA 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 BRF SA with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Lamb Weston.
Diversification Opportunities for BRF SA and Lamb Weston
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BRF and Lamb is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR 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 BRF SA 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 BRF SA ADR 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 BRF SA i.e., BRF SA and Lamb Weston go up and down completely randomly.
Pair Corralation between BRF SA and Lamb Weston
Given the investment horizon of 90 days BRF SA ADR is expected to generate 0.64 times more return on investment than Lamb Weston. However, BRF SA ADR is 1.56 times less risky than Lamb Weston. It trades about 0.08 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.21 per unit of risk. If you would invest 326.00 in BRF SA ADR on January 18, 2024 and sell it today you would earn a total of 14.00 from holding BRF SA ADR or generate 4.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
BRF SA ADR vs. Lamb Weston Holdings
Performance |
Timeline |
BRF SA ADR |
Lamb Weston Holdings |
BRF SA and Lamb Weston Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BRF SA and Lamb Weston
The main advantage of trading using opposite BRF SA and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA 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.BRF SA vs. Seneca Foods Corp | BRF SA vs. Central Garden Pet | BRF SA vs. Central Garden Pet | BRF SA vs. Aryzta AG PK |
Lamb Weston vs. Seneca Foods Corp | Lamb Weston vs. Central Garden Pet | Lamb Weston vs. Central Garden Pet | Lamb Weston vs. Aryzta AG PK |
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.
Other Complementary Tools
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |