Correlation Between Freshpet and Treehouse Foods
Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet and Treehouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Treehouse Foods, you can compare the effects of market volatilities on Freshpet 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 Freshpet with a short position of Treehouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Treehouse Foods.
Diversification Opportunities for Freshpet and Treehouse Foods
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freshpet and Treehouse is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Treehouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treehouse Foods and Freshpet 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 Freshpet 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 Freshpet i.e., Freshpet and Treehouse Foods go up and down completely randomly.
Pair Corralation between Freshpet and Treehouse Foods
Given the investment horizon of 90 days Freshpet is expected to generate 0.8 times more return on investment than Treehouse Foods. However, Freshpet is 1.24 times less risky than Treehouse Foods. It trades about 0.16 of its potential returns per unit of risk. Treehouse Foods is currently generating about -0.02 per unit of risk. If you would invest 13,369 in Freshpet on November 1, 2024 and sell it today you would earn a total of 2,890 from holding Freshpet or generate 21.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. Treehouse Foods
Performance |
| Timeline |
| Freshpet |
| Treehouse Foods |
Freshpet and Treehouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and Treehouse Foods
The main advantage of trading using opposite Freshpet and Treehouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
| Treehouse Foods vs. Lancaster Colony | Treehouse Foods vs. John B Sanfilippo | Treehouse Foods vs. Seneca Foods Corp | Treehouse Foods vs. Post Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets |