Correlation Between CTS and SunOpta

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

By analyzing existing cross correlation between CTS Corporation and SunOpta, you can compare the effects of market volatilities on CTS 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 CTS with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTS and SunOpta.

Diversification Opportunities for CTS and SunOpta

0.86

Correlation Coefficient

CTS  SunOpta

Very poor diversification

The 3 months correlation between CTS and SunOpta is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CTS Corp. and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and CTS 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 CTS Corporation 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 CTS i.e., CTS and SunOpta go up and down completely randomly.

Pair Corralation between CTS and SunOpta

Considering the 90-day investment horizon CTS Corporation is expected to under-perform the SunOpta. In addition to that, CTS is 1.05 times more volatile than SunOpta. It trades about -0.1 of its total potential returns per unit of risk. SunOpta is currently generating about -0.03 per unit of volatility. If you would invest  782.00  in SunOpta on September 23, 2024 and sell it today you would lose (9.00) from holding SunOpta or give up 1.15% of portfolio value over 90 days.

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

CTS Corp.  vs.  SunOpta

CTS Corporation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, CTS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SunOpta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTS and SunOpta

The main advantage of trading using opposite CTS and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTS 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 CTS Corporation 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..