Correlation Between SunOpta and Agriculture Natural

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

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

Diversification Opportunities for SunOpta and Agriculture Natural

-0.59

Correlation Coefficient

SunOpta  Agriculture Natural

Excellent diversification

The 3 months correlation between SunOpta and Agriculture is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Agriculture Natural Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agriculture Natural and SunOpta 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 SunOpta are associated (or correlated) with Agriculture Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agriculture Natural has no effect on the direction of SunOpta i.e., SunOpta and Agriculture Natural go up and down completely randomly.

Pair Corralation between SunOpta and Agriculture Natural

Given the investment horizon of 90 days SunOpta is expected to under-perform the Agriculture Natural. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 3.1 times less risky than Agriculture Natural. The stock trades about -0.22 of its potential returns per unit of risk. The Agriculture Natural Solutions is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Agriculture Natural Solutions on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Agriculture Natural Solutions or generate 46.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

SunOpta  vs.  Agriculture Natural Solutions

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Agriculture Natural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agriculture Natural Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Agriculture Natural showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunOpta and Agriculture Natural

The main advantage of trading using opposite SunOpta and Agriculture Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Agriculture Natural 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 Agriculture Natural will offset losses from the drop in Agriculture Natural's long position.

The idea behind SunOpta and Agriculture Natural Solutions 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 Global Correlations module to find global opportunities by holding instruments from different markets.