Correlation Between Pilgrims Pride and SunOpta

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

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

Diversification Opportunities for Pilgrims Pride and SunOpta

0.4

Correlation Coefficient

Pilgrims Pride  SunOpta

Very weak diversification

The 3 months correlation between Pilgrims and SunOpta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pilgrims Pride Corp and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Pilgrims Pride 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 Pilgrims Pride Corp 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 Pilgrims Pride i.e., Pilgrims Pride and SunOpta go up and down completely randomly.

Pair Corralation between Pilgrims Pride and SunOpta

Considering the 90-day investment horizon Pilgrims Pride Corp is expected to generate 0.52 times more return on investment than SunOpta. However, Pilgrims Pride Corp is 1.94 times less risky than SunOpta. It trades about 0.08 of its potential returns per unit of risk. SunOpta is currently generating about 0.01 per unit of risk. If you would invest  2,379  in Pilgrims Pride Corp on October 21, 2024 and sell it today you would earn a total of  2,151  from holding Pilgrims Pride Corp or generate 90.42% return on investment over 90 days.

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

Pilgrims Pride Corp  vs.  SunOpta

Pilgrims Pride Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pilgrims Pride is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Pilgrims Pride and SunOpta

The main advantage of trading using opposite Pilgrims Pride and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilgrims Pride 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 Pilgrims Pride Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.