Correlation Between TreeHouse Foods and LION ONE
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and LION ONE 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 LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and LION ONE METALS, you can compare the effects of market volatilities on TreeHouse Foods and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and LION ONE.
Diversification Opportunities for TreeHouse Foods and LION ONE
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between TreeHouse and LION is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and LION ONE go up and down completely randomly.
Pair Corralation between TreeHouse Foods and LION ONE
Assuming the 90 days horizon TreeHouse Foods is expected to generate 1.07 times more return on investment than LION ONE. However, TreeHouse Foods is 1.07 times more volatile than LION ONE METALS. It trades about 0.01 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 3,400 in TreeHouse Foods on August 31, 2024 and sell it today you would lose (20.00) from holding TreeHouse Foods or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. LION ONE METALS
Performance |
| Timeline |
| TreeHouse Foods |
| LION ONE METALS |
TreeHouse Foods and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and LION ONE
The main advantage of trading using opposite TreeHouse Foods and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| TreeHouse Foods vs. Danone SA | TreeHouse Foods vs. Superior Plus Corp | TreeHouse Foods vs. NMI Holdings | TreeHouse Foods vs. Origin Agritech |
| LION ONE vs. SIVERS SEMICONDUCTORS AB | LION ONE vs. Darden Restaurants | LION ONE vs. Reliance Steel Aluminum | LION ONE 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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