Correlation Between SunOpta and Ecovyst

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

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

Diversification Opportunities for SunOpta and Ecovyst

0.88

Correlation Coefficient

SunOpta  Ecovyst

Very poor diversification

The 3 months correlation between SunOpta and Ecovyst is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of SunOpta i.e., SunOpta and Ecovyst go up and down completely randomly.

Pair Corralation between SunOpta and Ecovyst

Given the investment horizon of 90 days SunOpta is expected to generate 0.99 times more return on investment than Ecovyst. However, SunOpta is 1.01 times less risky than Ecovyst. It trades about 0.03 of its potential returns per unit of risk. Ecovyst is currently generating about -0.11 per unit of risk. If you would invest  779.00  in SunOpta on October 7, 2024 and sell it today you would earn a total of  7.00  from holding SunOpta or generate 0.9% return on investment over 90 days.

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

SunOpta  vs.  Ecovyst

SunOpta

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 15 (%) 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.

Ecovyst

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunOpta and Ecovyst

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

The idea behind SunOpta and Ecovyst 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.