Correlation Between Treehouse Foods and Bridgford Foods
Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and Bridgford Foods 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 Bridgford Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treehouse Foods and Bridgford Foods, you can compare the effects of market volatilities on Treehouse Foods and Bridgford Foods 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 Bridgford Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and Bridgford Foods.
Diversification Opportunities for Treehouse Foods and Bridgford Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Treehouse and Bridgford is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and Bridgford Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgford Foods 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 Bridgford Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgford Foods has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Bridgford Foods go up and down completely randomly.
Pair Corralation between Treehouse Foods and Bridgford Foods
Considering the 90-day investment horizon Treehouse Foods is expected to under-perform the Bridgford Foods. But the stock apears to be less risky and, when comparing its historical volatility, Treehouse Foods is 1.3 times less risky than Bridgford Foods. The stock trades about -0.02 of its potential returns per unit of risk. The Bridgford Foods is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,167 in Bridgford Foods on August 24, 2024 and sell it today you would lose (244.00) from holding Bridgford Foods or give up 20.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Treehouse Foods vs. Bridgford Foods
Performance |
| Timeline |
| Treehouse Foods |
| Bridgford Foods |
Treehouse Foods and Bridgford Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treehouse Foods and Bridgford Foods
The main advantage of trading using opposite Treehouse Foods and Bridgford Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, Bridgford Foods 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 Bridgford Foods will offset losses from the drop in Bridgford Foods' long position.| Treehouse Foods vs. Lancaster Colony | Treehouse Foods vs. John B Sanfilippo | Treehouse Foods vs. Seneca Foods Corp | Treehouse Foods vs. Post Holdings |
| Bridgford Foods vs. J J Snack | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Central Garden Pet | Bridgford Foods vs. Lancaster Colony |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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