Correlation Between Treehouse Foods and SunOpta

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

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

Diversification Opportunities for Treehouse Foods and SunOpta

-0.8

Correlation Coefficient

Treehouse Foods  SunOpta

Pay attention - limited upside

The 3 months correlation between Treehouse and SunOpta is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and SunOpta go up and down completely randomly.

Pair Corralation between Treehouse Foods and SunOpta

Considering the 90-day investment horizon Treehouse Foods is expected to generate 0.68 times more return on investment than SunOpta. However, Treehouse Foods is 1.48 times less risky than SunOpta. It trades about 0.25 of its potential returns per unit of risk. SunOpta is currently generating about 0.0 per unit of risk. If you would invest  3,322  in Treehouse Foods on October 6, 2024 and sell it today you would earn a total of  200.00  from holding Treehouse Foods or generate 6.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Treehouse Foods  vs.  SunOpta

Treehouse Foods

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SunOpta

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treehouse Foods and SunOpta

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

The idea behind Treehouse Foods and SunOpta 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.