Correlation Between SunOpta and Pacific Gas

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

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

Diversification Opportunities for SunOpta and Pacific Gas

0.17

Correlation Coefficient

SunOpta  Pacific Gas

Average diversification

The 3 months correlation between SunOpta and Pacific is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Pacific Gas Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas Electric 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas Electric has no effect on the direction of SunOpta i.e., SunOpta and Pacific Gas go up and down completely randomly.

Pair Corralation between SunOpta and Pacific Gas

Given the investment horizon of 90 days SunOpta is expected to generate 0.35 times more return on investment than Pacific Gas. However, SunOpta is 2.85 times less risky than Pacific Gas. It trades about -0.01 of its potential returns per unit of risk. Pacific Gas Electric is currently generating about -0.01 per unit of risk. If you would invest  781.00  in SunOpta on September 28, 2024 and sell it today you would lose (6.00) from holding SunOpta or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

SunOpta  vs.  Pacific Gas Electric

SunOpta

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 10 (%) 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.

Pacific Gas Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Gas Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SunOpta and Pacific Gas

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

The idea behind SunOpta and Pacific Gas Electric 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.