Correlation Between Procter Gamble and SunOpta

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

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

Diversification Opportunities for Procter Gamble and SunOpta

0.14

Correlation Coefficient

Procter Gamble  SunOpta

Average diversification

The 3 months correlation between Procter and SunOpta is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and SunOpta go up and down completely randomly.

Pair Corralation between Procter Gamble and SunOpta

Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.57 times more return on investment than SunOpta. However, Procter Gamble is 1.76 times less risky than SunOpta. It trades about -0.23 of its potential returns per unit of risk. SunOpta is currently generating about -0.17 per unit of risk. If you would invest  16,811  in Procter Gamble on October 22, 2024 and sell it today you would lose (698.00) from holding Procter Gamble or give up 4.15% of portfolio value over 90 days.

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

Procter Gamble  vs.  SunOpta

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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 Procter Gamble and SunOpta

The main advantage of trading using opposite Procter Gamble and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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 Procter Gamble 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 CEOs Directory module to screen CEOs from public companies around the world.