Correlation Between TreeHouse Foods and AECOM
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and AECOM 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 AECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and AECOM, you can compare the effects of market volatilities on TreeHouse Foods and AECOM 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 AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and AECOM.
Diversification Opportunities for TreeHouse Foods and AECOM
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TreeHouse and AECOM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM 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 AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and AECOM go up and down completely randomly.
Pair Corralation between TreeHouse Foods and AECOM
Assuming the 90 days horizon TreeHouse Foods is expected to under-perform the AECOM. In addition to that, TreeHouse Foods is 1.43 times more volatile than AECOM. It trades about -0.03 of its total potential returns per unit of risk. AECOM is currently generating about 0.07 per unit of volatility. If you would invest 7,635 in AECOM on August 31, 2024 and sell it today you would earn a total of 3,365 from holding AECOM or generate 44.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
TreeHouse Foods vs. AECOM
Performance |
| Timeline |
| TreeHouse Foods |
| AECOM |
TreeHouse Foods and AECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and AECOM
The main advantage of trading using opposite TreeHouse Foods and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, AECOM 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 AECOM will offset losses from the drop in AECOM's long position.| TreeHouse Foods vs. Danone SA | TreeHouse Foods vs. Superior Plus Corp | TreeHouse Foods vs. NMI Holdings | TreeHouse Foods vs. Origin Agritech |
| AECOM vs. MeVis Medical Solutions | AECOM vs. SAFETY MEDICAL PROD | AECOM vs. TreeHouse Foods | AECOM vs. Performance Food Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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