Correlation Between Hain Celestial and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Hain Celestial 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 Hain Celestial and Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hain Celestial and Lamb Weston Holdings, you can compare the effects of market volatilities on Hain Celestial 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 Hain Celestial with a short position of Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hain Celestial and Lamb Weston.
Diversification Opportunities for Hain Celestial and Lamb Weston
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hain and Lamb is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding The Hain Celestial 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 Hain Celestial 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 The Hain Celestial 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 Hain Celestial i.e., Hain Celestial and Lamb Weston go up and down completely randomly.
Pair Corralation between Hain Celestial and Lamb Weston
Given the investment horizon of 90 days The Hain Celestial is expected to under-perform the Lamb Weston. But the stock apears to be less risky and, when comparing its historical volatility, The Hain Celestial is 1.4 times less risky than Lamb Weston. The stock trades about -0.36 of its potential returns per unit of risk. The Lamb Weston Holdings is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 10,630 in Lamb Weston Holdings on January 27, 2024 and sell it today you would lose (2,280) from holding Lamb Weston Holdings or give up 21.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hain Celestial vs. Lamb Weston Holdings
Performance |
| Timeline |
| Hain Celestial |
| Lamb Weston Holdings |
Hain Celestial and Lamb Weston Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hain Celestial and Lamb Weston
The main advantage of trading using opposite Hain Celestial and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hain Celestial 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.| Hain Celestial vs. Hormel Foods | Hain Celestial vs. JM Smucker | Hain Celestial vs. McCormick Company Incorporated |
| Lamb Weston vs. Hormel Foods | Lamb Weston vs. JM Smucker | Lamb Weston vs. McCormick Company Incorporated |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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