Correlation Between ConAgra Foods and Treehouse Foods
Can any of the company-specific risk be diversified away by investing in both ConAgra Foods 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 ConAgra Foods and Treehouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Treehouse Foods, you can compare the effects of market volatilities on ConAgra Foods 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 ConAgra Foods with a short position of Treehouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Treehouse Foods.
Diversification Opportunities for ConAgra Foods and Treehouse Foods
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ConAgra and Treehouse is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Treehouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treehouse Foods and ConAgra Foods 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 ConAgra 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 ConAgra Foods i.e., ConAgra Foods and Treehouse Foods go up and down completely randomly.
Pair Corralation between ConAgra Foods and Treehouse Foods
Considering the 90-day investment horizon ConAgra Foods is expected to under-perform the Treehouse Foods. But the stock apears to be less risky and, when comparing its historical volatility, ConAgra Foods is 3.27 times less risky than Treehouse Foods. The stock trades about -0.28 of its potential returns per unit of risk. The Treehouse Foods is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 3,750 in Treehouse Foods on August 28, 2024 and sell it today you would lose (247.00) from holding Treehouse Foods or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConAgra Foods vs. Treehouse Foods
Performance |
| Timeline |
| ConAgra Foods |
| Treehouse Foods |
ConAgra Foods and Treehouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConAgra Foods and Treehouse Foods
The main advantage of trading using opposite ConAgra Foods and Treehouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods 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.| ConAgra Foods vs. Bellring Brands LLC | ConAgra Foods vs. Ingredion Incorporated | ConAgra Foods vs. Nomad Foods | ConAgra Foods vs. Simply Good Foods |
| Treehouse Foods vs. Lancaster Colony | Treehouse Foods vs. John B Sanfilippo | Treehouse Foods vs. Seneca Foods Corp | Treehouse Foods vs. Seneca Foods Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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