Correlation Between Aryzta AG and Lamb Weston

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

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

Diversification Opportunities for Aryzta AG and Lamb Weston

-0.77

Correlation Coefficient

Aryzta AG  Lamb Weston

Pay attention - limited upside

The 3 months correlation between Aryzta and Lamb is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK 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 Aryzta AG 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 Aryzta AG PK 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 Aryzta AG i.e., Aryzta AG and Lamb Weston go up and down completely randomly.

Pair Corralation between Aryzta AG and Lamb Weston

Assuming the 90 days horizon Aryzta AG PK is expected to under-perform the Lamb Weston. In addition to that, Aryzta AG is 1.06 times more volatile than Lamb Weston Holdings. It trades about -0.11 of its total potential returns per unit of risk. Lamb Weston Holdings is currently generating about 0.2 per unit of volatility. If you would invest  6,143  in Lamb Weston Holdings on September 3, 2024 and sell it today you would earn a total of  1,581  from holding Lamb Weston Holdings or generate 25.74% return on investment over 90 days.

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

Aryzta AG PK  vs.  Lamb Weston Holdings

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lamb Weston Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lamb Weston Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Lamb Weston showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aryzta AG and Lamb Weston

The main advantage of trading using opposite Aryzta AG and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aryzta AG 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 Aryzta AG PK 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.