Correlation Between Cal-Maine Foods and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both Cal-Maine 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 Cal-Maine 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 Cal Maine Foods and TreeHouse Foods, you can compare the effects of market volatilities on Cal-Maine 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 Cal-Maine Foods with a short position of TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cal-Maine Foods and TreeHouse Foods.
Diversification Opportunities for Cal-Maine Foods and TreeHouse Foods
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cal-Maine and TreeHouse is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cal Maine Foods and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods and Cal-Maine 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 Cal Maine 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 Cal-Maine Foods i.e., Cal-Maine Foods and TreeHouse Foods go up and down completely randomly.
Pair Corralation between Cal-Maine Foods and TreeHouse Foods
Assuming the 90 days horizon Cal Maine Foods is expected to generate 1.32 times more return on investment than TreeHouse Foods. However, Cal-Maine Foods is 1.32 times more volatile than TreeHouse Foods. It trades about 0.18 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.06 per unit of risk. If you would invest 9,736 in Cal Maine Foods on November 3, 2024 and sell it today you would earn a total of 994.00 from holding Cal Maine Foods or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cal Maine Foods vs. TreeHouse Foods
Performance |
| Timeline |
| Cal Maine Foods |
| TreeHouse Foods |
Cal-Maine Foods and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cal-Maine Foods and TreeHouse Foods
The main advantage of trading using opposite Cal-Maine Foods and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cal-Maine 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.| Cal-Maine Foods vs. LOANDEPOT INC A | Cal-Maine Foods vs. WILLIS LEASE FIN | Cal-Maine Foods vs. EEDUCATION ALBERT AB | Cal-Maine Foods vs. FUYO GENERAL LEASE |
| TreeHouse Foods vs. BII Railway Transportation | TreeHouse Foods vs. HAVERTY FURNITURE A | TreeHouse Foods vs. TITANIUM TRANSPORTGROUP | TreeHouse Foods vs. Algonquin Power Utilities |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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