Correlation Between TreeHouse Foods and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and Dairy 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 Dairy 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 Dairy Farm International, you can compare the effects of market volatilities on TreeHouse Foods and Dairy 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and Dairy Farm.
Diversification Opportunities for TreeHouse Foods and Dairy Farm
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TreeHouse and Dairy is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and Dairy Farm go up and down completely randomly.
Pair Corralation between TreeHouse Foods and Dairy Farm
Assuming the 90 days horizon TreeHouse Foods is expected to under-perform the Dairy Farm. But the stock apears to be less risky and, when comparing its historical volatility, TreeHouse Foods is 1.17 times less risky than Dairy Farm. The stock trades about -0.03 of its potential returns per unit of risk. The Dairy Farm International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 243.00 in Dairy Farm International on September 1, 2024 and sell it today you would lose (13.00) from holding Dairy Farm International or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. Dairy Farm International
Performance |
| Timeline |
| TreeHouse Foods |
| Dairy Farm International |
TreeHouse Foods and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and Dairy Farm
The main advantage of trading using opposite TreeHouse Foods and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, Dairy 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 Dairy Farm will offset losses from the drop in Dairy Farm'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 |
| Dairy Farm vs. TESCO PLC LS 0633333 | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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