Correlation Between SunOpta and Air Products

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

By analyzing existing cross correlation between SunOpta and Air Products and, you can compare the effects of market volatilities on SunOpta and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Air Products.

Diversification Opportunities for SunOpta and Air Products

-0.05

Correlation Coefficient

SunOpta  Air Products

Good diversification

The 3 months correlation between SunOpta and Air is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of SunOpta i.e., SunOpta and Air Products go up and down completely randomly.

Pair Corralation between SunOpta and Air Products

Given the investment horizon of 90 days SunOpta is expected to generate 1.8 times more return on investment than Air Products. However, SunOpta is 1.8 times more volatile than Air Products and. It trades about 0.04 of its potential returns per unit of risk. Air Products and is currently generating about 0.05 per unit of risk. If you would invest  459.00  in SunOpta on December 7, 2024 and sell it today you would earn a total of  139.50  from holding SunOpta or generate 30.39% return on investment over 90 days.

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

SunOpta  vs.  Air Products and

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.

Air Products

Risk-Adjusted Performance

Weak

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

Pair Trading with SunOpta and Air Products

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

The idea behind SunOpta and Air Products and 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.