Correlation Between J+J SNACK and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both J+J SNACK 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 J+J SNACK and TreeHouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JJ SNACK FOODS and TreeHouse Foods, you can compare the effects of market volatilities on J+J SNACK 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 J+J SNACK with a short position of TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and TreeHouse Foods.
Diversification Opportunities for J+J SNACK and TreeHouse Foods
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between J+J and TreeHouse is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods and J+J SNACK 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 JJ SNACK 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 J+J SNACK i.e., J+J SNACK and TreeHouse Foods go up and down completely randomly.
Pair Corralation between J+J SNACK and TreeHouse Foods
Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.32 times more return on investment than TreeHouse Foods. However, JJ SNACK FOODS is 3.16 times less risky than TreeHouse Foods. It trades about 0.2 of its potential returns per unit of risk. TreeHouse Foods is currently generating about -0.02 per unit of risk. If you would invest 15,400 in JJ SNACK FOODS on August 31, 2024 and sell it today you would earn a total of 900.00 from holding JJ SNACK FOODS or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JJ SNACK FOODS vs. TreeHouse Foods
Performance |
| Timeline |
| JJ SNACK FOODS |
| TreeHouse Foods |
J+J SNACK and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J+J SNACK and TreeHouse Foods
The main advantage of trading using opposite J+J SNACK and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J+J SNACK 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.| J+J SNACK vs. Danone SA | J+J SNACK vs. Superior Plus Corp | J+J SNACK vs. NMI Holdings | J+J SNACK vs. Origin Agritech |
| TreeHouse Foods vs. Danone SA | TreeHouse Foods vs. Superior Plus Corp | TreeHouse Foods vs. NMI Holdings | TreeHouse Foods vs. Origin Agritech |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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