Correlation Between TreeHouse Foods and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and LEGACY IRON 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 LEGACY IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and LEGACY IRON ORE, you can compare the effects of market volatilities on TreeHouse Foods and LEGACY IRON 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 LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and LEGACY IRON.
Diversification Opportunities for TreeHouse Foods and LEGACY IRON
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TreeHouse and LEGACY is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE 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 LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and LEGACY IRON go up and down completely randomly.
Pair Corralation between TreeHouse Foods and LEGACY IRON
If you would invest 1.05 in LEGACY IRON ORE on September 1, 2024 and sell it today you would earn a total of 0.00 from holding LEGACY IRON ORE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. LEGACY IRON ORE
Performance |
| Timeline |
| TreeHouse Foods |
| LEGACY IRON ORE |
TreeHouse Foods and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and LEGACY IRON
The main advantage of trading using opposite TreeHouse Foods and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| TreeHouse Foods vs. LEGACY IRON ORE | TreeHouse Foods vs. Reliance Steel Aluminum | TreeHouse Foods vs. Caltagirone SpA | TreeHouse Foods vs. REGAL ASIAN INVESTMENTS |
| LEGACY IRON vs. SIVERS SEMICONDUCTORS AB | LEGACY IRON vs. Darden Restaurants | LEGACY IRON vs. Reliance Steel Aluminum | LEGACY IRON vs. Q2M Managementberatung AG |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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