Correlation Between SunOpta and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both SunOpta and Nomura Holdings 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 Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Nomura Holdings ADR, you can compare the effects of market volatilities on SunOpta and Nomura Holdings 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Nomura Holdings.
Diversification Opportunities for SunOpta and Nomura Holdings
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SunOpta and Nomura is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of SunOpta i.e., SunOpta and Nomura Holdings go up and down completely randomly.
Pair Corralation between SunOpta and Nomura Holdings
Given the investment horizon of 90 days SunOpta is expected to generate 1.25 times more return on investment than Nomura Holdings. However, SunOpta is 1.25 times more volatile than Nomura Holdings ADR. It trades about 0.01 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about -0.2 per unit of risk. If you would invest 772.00 in SunOpta on September 24, 2024 and sell it today you would earn a total of 1.00 from holding SunOpta or generate 0.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SunOpta vs. Nomura Holdings ADR
Performance |
Timeline |
SunOpta |
Nomura Holdings ADR |
SunOpta and Nomura Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SunOpta and Nomura Holdings
The main advantage of trading using opposite SunOpta and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Nomura Holdings 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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