Correlation Between SAFETY MEDICAL and TreeHouse Foods
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL 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 SAFETY MEDICAL and TreeHouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and TreeHouse Foods, you can compare the effects of market volatilities on SAFETY MEDICAL 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 SAFETY MEDICAL with a short position of TreeHouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and TreeHouse Foods.
Diversification Opportunities for SAFETY MEDICAL and TreeHouse Foods
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SAFETY and TreeHouse is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and TreeHouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TreeHouse Foods and SAFETY MEDICAL 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and TreeHouse Foods go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and TreeHouse Foods
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the TreeHouse Foods. In addition to that, SAFETY MEDICAL is 1.46 times more volatile than TreeHouse Foods. It trades about -0.02 of its total potential returns per unit of risk. TreeHouse Foods is currently generating about -0.03 per unit of volatility. If you would invest 4,520 in TreeHouse Foods on August 31, 2024 and sell it today you would lose (1,240) from holding TreeHouse Foods or give up 27.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. TreeHouse Foods
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| TreeHouse Foods |
SAFETY MEDICAL and TreeHouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and TreeHouse Foods
The main advantage of trading using opposite SAFETY MEDICAL and TreeHouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL 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.| SAFETY MEDICAL vs. SIVERS SEMICONDUCTORS AB | SAFETY MEDICAL vs. Darden Restaurants | SAFETY MEDICAL vs. Reliance Steel Aluminum | SAFETY MEDICAL vs. Q2M Managementberatung AG |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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