Correlation Between Treehouse Foods and JM Smucker
Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and JM Smucker 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 JM Smucker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treehouse Foods and JM Smucker, you can compare the effects of market volatilities on Treehouse Foods and JM Smucker 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 JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and JM Smucker.
Diversification Opportunities for Treehouse Foods and JM Smucker
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Treehouse and SJM is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and JM Smucker go up and down completely randomly.
Pair Corralation between Treehouse Foods and JM Smucker
Considering the 90-day investment horizon Treehouse Foods is expected to under-perform the JM Smucker. In addition to that, Treehouse Foods is 2.8 times more volatile than JM Smucker. It trades about -0.07 of its total potential returns per unit of risk. JM Smucker is currently generating about -0.02 per unit of volatility. If you would invest 11,433 in JM Smucker on August 28, 2024 and sell it today you would lose (71.00) from holding JM Smucker or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treehouse Foods vs. JM Smucker
Performance |
| Timeline |
| Treehouse Foods |
| JM Smucker |
Treehouse Foods and JM Smucker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treehouse Foods and JM Smucker
The main advantage of trading using opposite Treehouse Foods and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker'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 |
| JM Smucker vs. Bellring Brands LLC | JM Smucker vs. Ingredion Incorporated | JM Smucker vs. Nomad Foods | JM Smucker vs. Simply Good 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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