Correlation Between Treehouse Foods and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and Coffee Holding 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 Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treehouse Foods and Coffee Holding Co, you can compare the effects of market volatilities on Treehouse Foods and Coffee Holding 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 Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and Coffee Holding.
Diversification Opportunities for Treehouse Foods and Coffee Holding
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treehouse and Coffee is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding 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 Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Coffee Holding go up and down completely randomly.
Pair Corralation between Treehouse Foods and Coffee Holding
Considering the 90-day investment horizon Treehouse Foods is expected to under-perform the Coffee Holding. In addition to that, Treehouse Foods is 1.07 times more volatile than Coffee Holding Co. It trades about -0.07 of its total potential returns per unit of risk. Coffee Holding Co is currently generating about 0.15 per unit of volatility. If you would invest 315.00 in Coffee Holding Co on August 27, 2024 and sell it today you would earn a total of 33.00 from holding Coffee Holding Co or generate 10.48% 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. Coffee Holding Co
Performance |
| Timeline |
| Treehouse Foods |
| Coffee Holding |
Treehouse Foods and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treehouse Foods and Coffee Holding
The main advantage of trading using opposite Treehouse Foods and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.| Treehouse Foods vs. Lancaster Colony | Treehouse Foods vs. John B Sanfilippo | Treehouse Foods vs. Seneca Foods Corp | Treehouse Foods vs. Seneca Foods Corp |
| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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