Correlation Between TreeHouse Foods and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and FARO Technologies 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 FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and FARO Technologies, you can compare the effects of market volatilities on TreeHouse Foods and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and FARO Technologies.
Diversification Opportunities for TreeHouse Foods and FARO Technologies
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TreeHouse and FARO is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and FARO Technologies go up and down completely randomly.
Pair Corralation between TreeHouse Foods and FARO Technologies
Assuming the 90 days horizon TreeHouse Foods is expected to under-perform the FARO Technologies. But the stock apears to be less risky and, when comparing its historical volatility, TreeHouse Foods is 1.91 times less risky than FARO Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The FARO Technologies is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,610 in FARO Technologies on September 1, 2024 and sell it today you would earn a total of 870.00 from holding FARO Technologies or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. FARO Technologies
Performance |
| Timeline |
| TreeHouse Foods |
| FARO Technologies |
TreeHouse Foods and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and FARO Technologies
The main advantage of trading using opposite TreeHouse Foods and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' 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 |
| FARO Technologies vs. Perseus Mining Limited | FARO Technologies vs. LION ONE METALS | FARO Technologies vs. Western Copper and | FARO Technologies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |