Correlation Between Grupo Bimbo and Treehouse Foods
Can any of the company-specific risk be diversified away by investing in both Grupo Bimbo 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 Grupo Bimbo and Treehouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Bimbo SAB and Treehouse Foods, you can compare the effects of market volatilities on Grupo Bimbo 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 Grupo Bimbo with a short position of Treehouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Bimbo and Treehouse Foods.
Diversification Opportunities for Grupo Bimbo and Treehouse Foods
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Treehouse is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Bimbo SAB and Treehouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treehouse Foods and Grupo Bimbo 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 Grupo Bimbo SAB 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 Grupo Bimbo i.e., Grupo Bimbo and Treehouse Foods go up and down completely randomly.
Pair Corralation between Grupo Bimbo and Treehouse Foods
Assuming the 90 days horizon Grupo Bimbo SAB is expected to generate 1.23 times more return on investment than Treehouse Foods. However, Grupo Bimbo is 1.23 times more volatile than Treehouse Foods. It trades about -0.06 of its potential returns per unit of risk. Treehouse Foods is currently generating about -0.08 per unit of risk. If you would invest 354.00 in Grupo Bimbo SAB on August 28, 2024 and sell it today you would lose (49.00) from holding Grupo Bimbo SAB or give up 13.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Bimbo SAB vs. Treehouse Foods
Performance |
| Timeline |
| Grupo Bimbo SAB |
| Treehouse Foods |
Grupo Bimbo and Treehouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Bimbo and Treehouse Foods
The main advantage of trading using opposite Grupo Bimbo and Treehouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Bimbo 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.| Grupo Bimbo vs. High Liner Foods | Grupo Bimbo vs. Lamb Weston Holdings | Grupo Bimbo vs. Kellanova | Grupo Bimbo vs. J J Snack |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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