Correlation Between TreeHouse Foods and H FARM
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and H FARM 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 TreeHouse Foods and H FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and H FARM SPA, you can compare the effects of market volatilities on TreeHouse Foods and H FARM 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 TreeHouse Foods with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and H FARM.
Diversification Opportunities for TreeHouse Foods and H FARM
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TreeHouse and 5JQ is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and TreeHouse 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 TreeHouse Foods are associated (or correlated) with H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and H FARM go up and down completely randomly.
Pair Corralation between TreeHouse Foods and H FARM
Assuming the 90 days horizon TreeHouse Foods is expected to under-perform the H FARM. But the stock apears to be less risky and, when comparing its historical volatility, TreeHouse Foods is 2.46 times less risky than H FARM. The stock trades about -0.02 of its potential returns per unit of risk. The H FARM SPA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 15.00 in H FARM SPA on October 26, 2024 and sell it today you would lose (2.00) from holding H FARM SPA or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. H FARM SPA
Performance |
| Timeline |
| TreeHouse Foods |
| H FARM SPA |
TreeHouse Foods and H FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and H FARM
The main advantage of trading using opposite TreeHouse Foods and H FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, H FARM 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 H FARM will offset losses from the drop in H FARM's long position.| TreeHouse Foods vs. General Mills | TreeHouse Foods vs. Danone SA | TreeHouse Foods vs. Hormel Foods | TreeHouse Foods vs. Kellogg Company |
| H FARM vs. Soken Chemical Engineering | H FARM vs. Tyson Foods | H FARM vs. Mitsui Chemicals | H FARM vs. TreeHouse Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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