Correlation Between Hormel Foods and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both Hormel 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 Hormel 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 Hormel Foods and TreeHouse Foods, you can compare the effects of market volatilities on Hormel 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 Hormel Foods with a short position of TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and TreeHouse Foods.
Diversification Opportunities for Hormel Foods and TreeHouse Foods
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hormel and TreeHouse is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods and Hormel 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 Hormel 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 Hormel Foods i.e., Hormel Foods and TreeHouse Foods go up and down completely randomly.
Pair Corralation between Hormel Foods and TreeHouse Foods
Assuming the 90 days horizon Hormel Foods is expected to under-perform the TreeHouse Foods. But the stock apears to be less risky and, when comparing its historical volatility, Hormel Foods is 1.36 times less risky than TreeHouse Foods. The stock trades about -0.03 of its potential returns per unit of risk. The TreeHouse Foods is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,480 in TreeHouse Foods on November 5, 2024 and sell it today you would lose (1,120) from holding TreeHouse Foods or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. TreeHouse Foods
Performance |
| Timeline |
| Hormel Foods |
| TreeHouse Foods |
Hormel Foods and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and TreeHouse Foods
The main advantage of trading using opposite Hormel Foods and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel 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.| Hormel Foods vs. Check Point Software | Hormel Foods vs. Alfa Financial Software | Hormel Foods vs. GigaMedia | Hormel Foods vs. Take Two Interactive Software |
| TreeHouse Foods vs. ANTA SPORTS PRODUCT | TreeHouse Foods vs. Constellation Software | TreeHouse Foods vs. RYU Apparel | TreeHouse Foods vs. PSI Software AG |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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