Correlation Between TreeHouse Foods and MTRLimited
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and MTRLimited 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 MTRLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and MTR Limited, you can compare the effects of market volatilities on TreeHouse Foods and MTRLimited 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 MTRLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and MTRLimited.
Diversification Opportunities for TreeHouse Foods and MTRLimited
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TreeHouse and MTRLimited is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and MTR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTR Limited 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 MTRLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTR Limited has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and MTRLimited go up and down completely randomly.
Pair Corralation between TreeHouse Foods and MTRLimited
Assuming the 90 days horizon TreeHouse Foods is expected to generate 1.53 times more return on investment than MTRLimited. However, TreeHouse Foods is 1.53 times more volatile than MTR Limited. It trades about -0.06 of its potential returns per unit of risk. MTR Limited is currently generating about -0.34 per unit of risk. If you would invest 3,400 in TreeHouse Foods on November 3, 2024 and sell it today you would lose (100.00) from holding TreeHouse Foods or give up 2.94% 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. MTR Limited
Performance |
| Timeline |
| TreeHouse Foods |
| MTR Limited |
TreeHouse Foods and MTRLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and MTRLimited
The main advantage of trading using opposite TreeHouse Foods and MTRLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, MTRLimited 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 MTRLimited will offset losses from the drop in MTRLimited's long position.| TreeHouse Foods vs. BII Railway Transportation | TreeHouse Foods vs. HAVERTY FURNITURE A | TreeHouse Foods vs. TITANIUM TRANSPORTGROUP | TreeHouse Foods vs. Algonquin Power Utilities |
| MTRLimited vs. WT OFFSHORE | MTRLimited vs. SBM OFFSHORE | MTRLimited vs. Solstad Offshore ASA | MTRLimited vs. Calibre Mining Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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