Correlation Between Treehouse Foods and Hostess Brands
Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and Hostess Brands 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 Hostess Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treehouse Foods and Hostess Brands, you can compare the effects of market volatilities on Treehouse Foods and Hostess Brands 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 Hostess Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and Hostess Brands.
Diversification Opportunities for Treehouse Foods and Hostess Brands
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treehouse and Hostess is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and Hostess Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hostess Brands 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 Hostess Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hostess Brands has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Hostess Brands go up and down completely randomly.
Pair Corralation between Treehouse Foods and Hostess Brands
If you would invest 2,440 in Hostess Brands on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Hostess Brands or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Treehouse Foods vs. Hostess Brands
Performance |
| Timeline |
| Treehouse Foods |
| Hostess Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Treehouse Foods and Hostess Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treehouse Foods and Hostess Brands
The main advantage of trading using opposite Treehouse Foods and Hostess Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, Hostess Brands 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 Hostess Brands will offset losses from the drop in Hostess Brands' 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 |
| Hostess Brands vs. Simply Good Foods | Hostess Brands vs. Treehouse Foods | Hostess Brands vs. Post Holdings | Hostess Brands vs. Nomad 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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