Correlation Between Treehouse Foods and Hain Celestial

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

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

Diversification Opportunities for Treehouse Foods and Hain Celestial

0.41

Correlation Coefficient

Treehouse Foods  Hain Celestial

Very weak diversification

The 3 months correlation between Treehouse and Hain is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Treehouse Foods and The Hain Celestial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hain Celestial 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 Hain Celestial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hain Celestial has no effect on the direction of Treehouse Foods i.e., Treehouse Foods and Hain Celestial go up and down completely randomly.

Pair Corralation between Treehouse Foods and Hain Celestial

Considering the 90-day investment horizon Treehouse Foods is expected to under-perform the Hain Celestial. But the stock apears to be less risky and, when comparing its historical volatility, Treehouse Foods is 1.47 times less risky than Hain Celestial. The stock trades about -0.1 of its potential returns per unit of risk. The The Hain Celestial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  832.00  in The Hain Celestial on August 31, 2024 and sell it today you would earn a total of  31.00  from holding The Hain Celestial or generate 3.73% return on investment over 90 days.

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

Treehouse Foods  vs.  The Hain Celestial

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 unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hain Celestial

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hain Celestial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Hain Celestial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Treehouse Foods and Hain Celestial

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

The idea behind Treehouse Foods and The Hain Celestial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.