Correlation Between Treehouse Foods and Brasilagro Adr

Can any of the company-specific risk be diversified away by investing in both Treehouse Foods and Brasilagro Adr 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 Brasilagro Adr into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Treehouse Foods and Brasilagro Adr, you can compare the effects of market volatilities on Treehouse Foods and Brasilagro Adr 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 Brasilagro Adr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treehouse Foods and Brasilagro Adr.

Diversification Opportunities for Treehouse Foods and Brasilagro Adr

-0.31

Correlation Coefficient

Treehouse Foods  Brasilagro Adr

Very good diversification

The 3 months correlation between Treehouse and Brasilagro is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and Brasilagro Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brasilagro Adr 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 Brasilagro Adr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brasilagro Adr has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Brasilagro Adr go up and down completely randomly.

Pair Corralation between Treehouse Foods and Brasilagro Adr

Considering the 90-day investment horizon Treehouse Foods is expected to under-perform the Brasilagro Adr. In addition to that, Treehouse Foods is 1.45 times more volatile than Brasilagro Adr. It trades about -0.18 of its total potential returns per unit of risk. Brasilagro Adr is currently generating about 0.11 per unit of volatility. If you would invest  355.00  in Brasilagro Adr on December 30, 2024 and sell it today you would earn a total of  34.00  from holding Brasilagro Adr or generate 9.58% 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.  Brasilagro Adr

Treehouse Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Treehouse Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Brasilagro Adr

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brasilagro Adr are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Brasilagro Adr may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Treehouse Foods and Brasilagro Adr

The main advantage of trading using opposite Treehouse Foods and Brasilagro Adr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treehouse Foods position performs unexpectedly, Brasilagro Adr 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 Brasilagro Adr will offset losses from the drop in Brasilagro Adr's long position.

The idea behind Treehouse Foods and Brasilagro Adr pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.