Correlation Between Smart For and Treehouse Foods
Can any of the company-specific risk be diversified away by investing in both Smart For 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 Smart For and Treehouse Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart for Life, and Treehouse Foods, you can compare the effects of market volatilities on Smart For 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 Smart For with a short position of Treehouse Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart For and Treehouse Foods.
Diversification Opportunities for Smart For and Treehouse Foods
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and Treehouse is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Smart for Life, and Treehouse Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treehouse Foods and Smart For 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 Smart for Life, 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 Smart For i.e., Smart For and Treehouse Foods go up and down completely randomly.
Pair Corralation between Smart For and Treehouse Foods
Given the investment horizon of 90 days Smart for Life, is expected to under-perform the Treehouse Foods. In addition to that, Smart For is 7.66 times more volatile than Treehouse Foods. It trades about -0.13 of its total potential returns per unit of risk. Treehouse Foods is currently generating about 0.0 per unit of volatility. If you would invest 3,581 in Treehouse Foods on September 1, 2024 and sell it today you would lose (147.00) from holding Treehouse Foods or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.6% |
| Values | Daily Returns |
Smart for Life, vs. Treehouse Foods
Performance |
| Timeline |
| Smart for Life, |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Treehouse Foods |
Smart For and Treehouse Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart For and Treehouse Foods
The main advantage of trading using opposite Smart For and Treehouse Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart For 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.| Smart For vs. Bit Origin | Smart For vs. Better Choice | Smart For vs. Farmmi Inc | Smart For vs. Laird Superfood |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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