Correlation Between SunOpta and Hill Street

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

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

Diversification Opportunities for SunOpta and Hill Street

0.41

Correlation Coefficient

SunOpta  Hill Street

Very weak diversification

The 3 months correlation between SunOpta and Hill is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Hill Street Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hill Street Beverage 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 Hill Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hill Street Beverage has no effect on the direction of SunOpta i.e., SunOpta and Hill Street go up and down completely randomly.

Pair Corralation between SunOpta and Hill Street

Given the investment horizon of 90 days SunOpta is expected to generate 1.89 times less return on investment than Hill Street. But when comparing it to its historical volatility, SunOpta is 3.89 times less risky than Hill Street. It trades about 0.21 of its potential returns per unit of risk. Hill Street Beverage is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Hill Street Beverage on September 19, 2024 and sell it today you would earn a total of  2.00  from holding Hill Street Beverage or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

SunOpta  vs.  Hill Street Beverage

SunOpta

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hill Street Beverage

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hill Street Beverage are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hill Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SunOpta and Hill Street

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

The idea behind SunOpta and Hill Street Beverage 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.