Correlation Between SunOpta and Nates Food

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

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

Diversification Opportunities for SunOpta and Nates Food

-0.12

Correlation Coefficient

SunOpta  Nates Food

Good diversification

The 3 months correlation between SunOpta and Nates is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Nates Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nates Food 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 Nates Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nates Food has no effect on the direction of SunOpta i.e., SunOpta and Nates Food go up and down completely randomly.

Pair Corralation between SunOpta and Nates Food

Given the investment horizon of 90 days SunOpta is expected to generate 685.6 times less return on investment than Nates Food. But when comparing it to its historical volatility, SunOpta is 50.69 times less risky than Nates Food. It trades about 0.01 of its potential returns per unit of risk. Nates Food Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Nates Food Co on October 26, 2024 and sell it today you would lose (0.03) from holding Nates Food Co or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

SunOpta  vs.  Nates Food Co

SunOpta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 12 (%) 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.

Nates Food

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nates Food Co are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Nates Food exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunOpta and Nates Food

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

The idea behind SunOpta and Nates Food Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.