Correlation Between SunOpta and Mamas Creations

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

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

Diversification Opportunities for SunOpta and Mamas Creations

0.47

Correlation Coefficient

SunOpta  Mamas Creations

Very weak diversification

The 3 months correlation between SunOpta and Mamas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Mamas Creations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mamas Creations 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 Mamas Creations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mamas Creations has no effect on the direction of SunOpta i.e., SunOpta and Mamas Creations go up and down completely randomly.

Pair Corralation between SunOpta and Mamas Creations

Given the investment horizon of 90 days SunOpta is expected to generate 29.4 times less return on investment than Mamas Creations. But when comparing it to its historical volatility, SunOpta is 6.41 times less risky than Mamas Creations. It trades about 0.02 of its potential returns per unit of risk. Mamas Creations is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Mamas Creations on October 10, 2024 and sell it today you would earn a total of  525.00  from holding Mamas Creations or generate 282.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.16%
Values	Daily Returns

SunOpta  vs.  Mamas Creations

SunOpta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 7 (%) 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.

Mamas Creations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mamas Creations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SunOpta and Mamas Creations

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

The idea behind SunOpta and Mamas Creations 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.