Correlation Between Torque Lifestyle and Lamb Weston

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

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

Diversification Opportunities for Torque Lifestyle and Lamb Weston

-0.65

Correlation Coefficient

Torque Lifestyle  Lamb Weston

Excellent diversification

The 3 months correlation between Torque and Lamb is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Torque Lifestyle Brands 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 Torque Lifestyle 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 Torque Lifestyle Brands 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 Torque Lifestyle i.e., Torque Lifestyle and Lamb Weston go up and down completely randomly.

Pair Corralation between Torque Lifestyle and Lamb Weston

Given the investment horizon of 90 days Torque Lifestyle Brands is expected to generate 19.2 times more return on investment than Lamb Weston. However, Torque Lifestyle is 19.2 times more volatile than Lamb Weston Holdings. It trades about 0.1 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about 0.2 per unit of risk. If you would invest  0.59  in Torque Lifestyle Brands on September 3, 2024 and sell it today you would lose (0.16) from holding Torque Lifestyle Brands or give up 27.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Torque Lifestyle Brands  vs.  Lamb Weston Holdings

Torque Lifestyle Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torque Lifestyle Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Torque Lifestyle sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Torque Lifestyle and Lamb Weston

The main advantage of trading using opposite Torque Lifestyle and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torque Lifestyle 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 Torque Lifestyle Brands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.