Correlation Between TreeHouse Foods and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both TreeHouse Foods and INDOFOOD AGRI 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 INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TreeHouse Foods and INDOFOOD AGRI RES, you can compare the effects of market volatilities on TreeHouse Foods and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of TreeHouse Foods and INDOFOOD AGRI.
Diversification Opportunities for TreeHouse Foods and INDOFOOD AGRI
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TreeHouse and INDOFOOD is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding TreeHouse Foods and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of TreeHouse Foods i.e., TreeHouse Foods and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between TreeHouse Foods and INDOFOOD AGRI
Assuming the 90 days horizon TreeHouse Foods is expected to generate 1.77 times less return on investment than INDOFOOD AGRI. But when comparing it to its historical volatility, TreeHouse Foods is 1.33 times less risky than INDOFOOD AGRI. It trades about 0.01 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 22.00 in INDOFOOD AGRI RES on November 9, 2024 and sell it today you would earn a total of 0.00 from holding INDOFOOD AGRI RES or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TreeHouse Foods vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| TreeHouse Foods |
| INDOFOOD AGRI RES |
TreeHouse Foods and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TreeHouse Foods and INDOFOOD AGRI
The main advantage of trading using opposite TreeHouse Foods and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TreeHouse Foods position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| TreeHouse Foods vs. Auto Trader Group | TreeHouse Foods vs. FIRST SHIP LEASE | TreeHouse Foods vs. United Rentals | TreeHouse Foods vs. Global Ship Lease |
| INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Apple Inc | INDOFOOD AGRI vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |