Correlation Between Southern California and SunOpta

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

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

Diversification Opportunities for Southern California and SunOpta

0.15

Correlation Coefficient

Southern California  SunOpta

Average diversification

The 3 months correlation between Southern and SunOpta is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Gas and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Southern California 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 Southern California Gas 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 Southern California i.e., Southern California and SunOpta go up and down completely randomly.

Pair Corralation between Southern California and SunOpta

Assuming the 90 days horizon Southern California Gas is expected to under-perform the SunOpta. But the otc stock apears to be less risky and, when comparing its historical volatility, Southern California Gas is 1.84 times less risky than SunOpta. The otc stock trades about -0.11 of its potential returns per unit of risk. The SunOpta is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  598.00  in SunOpta on October 26, 2024 and sell it today you would earn a total of  128.00  from holding SunOpta or generate 21.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	54.24%
Values	Daily Returns

Southern California Gas  vs.  SunOpta

Southern California Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern California Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Southern California and SunOpta

The main advantage of trading using opposite Southern California and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California 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 Southern California Gas 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.