Correlation Between Treehouse Foods and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and Farmer Bros 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 Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treehouse Foods and Farmer Bros Co, you can compare the effects of market volatilities on Treehouse Foods and Farmer Bros 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 Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and Farmer Bros.
Diversification Opportunities for Treehouse Foods and Farmer Bros
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Treehouse and Farmer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros 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 Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Farmer Bros go up and down completely randomly.
Pair Corralation between Treehouse Foods and Farmer Bros
Considering the 90-day investment horizon Treehouse Foods is expected to generate 0.57 times more return on investment than Farmer Bros. However, Treehouse Foods is 1.76 times less risky than Farmer Bros. It trades about -0.01 of its potential returns per unit of risk. Farmer Bros Co is currently generating about -0.01 per unit of risk. If you would invest 4,006 in Treehouse Foods on August 24, 2024 and sell it today you would lose (414.00) from holding Treehouse Foods or give up 10.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treehouse Foods vs. Farmer Bros Co
Performance |
| Timeline |
| Treehouse Foods |
| Farmer Bros |
Treehouse Foods and Farmer Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treehouse Foods and Farmer Bros
The main advantage of trading using opposite Treehouse Foods and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, Farmer Bros 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 Farmer Bros will offset losses from the drop in Farmer Bros' long position.| Treehouse Foods vs. Lancaster Colony | Treehouse Foods vs. John B Sanfilippo | Treehouse Foods vs. Seneca Foods Corp | Treehouse Foods vs. Post Holdings |
| Farmer Bros vs. Bellring Brands LLC | Farmer Bros vs. Treehouse Foods | Farmer Bros vs. Ingredion Incorporated | Farmer Bros vs. JM Smucker |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |