Correlation Between Coca Cola and SunOpta

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

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

Diversification Opportunities for Coca Cola and SunOpta

-0.69

Correlation Coefficient

Coca Cola  SunOpta

Excellent diversification

The 3 months correlation between Coca and SunOpta is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola Femsa SAB and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Coca Cola 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 Coca Cola Femsa SAB 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 Coca Cola i.e., Coca Cola and SunOpta go up and down completely randomly.

Pair Corralation between Coca Cola and SunOpta

Considering the 90-day investment horizon Coca Cola Femsa SAB is expected to under-perform the SunOpta. But the stock apears to be less risky and, when comparing its historical volatility, Coca Cola Femsa SAB is 1.89 times less risky than SunOpta. The stock trades about -0.16 of its potential returns per unit of risk. The SunOpta is currently generating about -0.07 of returns per unit of risk over similar time horizon. 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Coca Cola Femsa SAB  vs.  SunOpta

Coca Cola Femsa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coca Cola Femsa SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Coca Cola and SunOpta

The main advantage of trading using opposite Coca Cola and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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 Coca Cola Femsa SAB 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.