Correlation Between Natures Sunshine and Treehouse Foods
Can any of the company-specific risk be diversified away by investing in both Natures Sunshine 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 Natures Sunshine and Treehouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natures Sunshine Products and Treehouse Foods, you can compare the effects of market volatilities on Natures Sunshine 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 Natures Sunshine with a short position of Treehouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natures Sunshine and Treehouse Foods.
Diversification Opportunities for Natures Sunshine and Treehouse Foods
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natures and Treehouse is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products and Treehouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treehouse Foods and Natures Sunshine 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 Natures Sunshine Products 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 Natures Sunshine i.e., Natures Sunshine and Treehouse Foods go up and down completely randomly.
Pair Corralation between Natures Sunshine and Treehouse Foods
Given the investment horizon of 90 days Natures Sunshine Products is expected to generate 1.32 times more return on investment than Treehouse Foods. However, Natures Sunshine is 1.32 times more volatile than Treehouse Foods. It trades about 0.13 of its potential returns per unit of risk. Treehouse Foods is currently generating about -0.13 per unit of risk. If you would invest 1,352 in Natures Sunshine Products on August 27, 2024 and sell it today you would earn a total of 278.00 from holding Natures Sunshine Products or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natures Sunshine Products vs. Treehouse Foods
Performance |
| Timeline |
| Natures Sunshine Products |
| Treehouse Foods |
Natures Sunshine and Treehouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natures Sunshine and Treehouse Foods
The main advantage of trading using opposite Natures Sunshine and Treehouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Sunshine 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.| Natures Sunshine vs. Seneca Foods Corp | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Central Garden Pet | Natures Sunshine vs. Associated British Foods |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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