Correlation Between High Liner and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both High Liner and TreeHouse Foods 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 High Liner and TreeHouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and TreeHouse Foods, you can compare the effects of market volatilities on High Liner and TreeHouse Foods 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 High Liner with a short position of TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and TreeHouse Foods.
Diversification Opportunities for High Liner and TreeHouse Foods
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between High and TreeHouse is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods and High Liner 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 High Liner Foods are associated (or correlated) with TreeHouse Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TreeHouse Foods has no effect on the direction of High Liner i.e., High Liner and TreeHouse Foods go up and down completely randomly.
Pair Corralation between High Liner and TreeHouse Foods
Assuming the 90 days horizon High Liner Foods is expected to generate 0.9 times more return on investment than TreeHouse Foods. However, High Liner Foods is 1.11 times less risky than TreeHouse Foods. It trades about 0.03 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.02 per unit of risk. If you would invest 883.00 in High Liner Foods on October 28, 2024 and sell it today you would earn a total of 177.00 from holding High Liner Foods or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. TreeHouse Foods
Performance |
| Timeline |
| High Liner Foods |
| TreeHouse Foods |
High Liner and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and TreeHouse Foods
The main advantage of trading using opposite High Liner and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, TreeHouse Foods 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 TreeHouse Foods will offset losses from the drop in TreeHouse Foods' long position.| High Liner vs. General Mills | High Liner vs. Danone SA | High Liner vs. Hormel Foods | High Liner vs. Kellogg Company |
| TreeHouse Foods vs. General Mills | TreeHouse Foods vs. Danone SA | TreeHouse Foods vs. Hormel Foods | TreeHouse Foods vs. Kellogg Company |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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