Correlation Between Hill Street and SunOpta

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

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

Diversification Opportunities for Hill Street and SunOpta

0.37

Correlation Coefficient

Hill Street  SunOpta

Weak diversification

The 3 months correlation between Hill and SunOpta is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hill Street Beverage and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Hill Street 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 Hill Street Beverage 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 Hill Street i.e., Hill Street and SunOpta go up and down completely randomly.

Pair Corralation between Hill Street and SunOpta

Assuming the 90 days horizon Hill Street Beverage is expected to under-perform the SunOpta. In addition to that, Hill Street is 3.51 times more volatile than SunOpta. It trades about -0.09 of its total potential returns per unit of risk. SunOpta is currently generating about -0.07 per unit of volatility. If you would invest  750.00  in SunOpta on October 20, 2024 and sell it today you would lose (20.00) from holding SunOpta or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Hill Street Beverage  vs.  SunOpta

Hill Street Beverage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hill Street Beverage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Hill Street reported solid returns over the last few months and may actually be approaching a breakup point.

SunOpta

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 11 (%) 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 Hill Street and SunOpta

The main advantage of trading using opposite Hill Street and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hill Street 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 Hill Street Beverage 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.