Correlation Between SunOpta and Procter Gamble

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

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

Diversification Opportunities for SunOpta and Procter Gamble

0.29

Correlation Coefficient

SunOpta  Procter Gamble

Modest diversification

The 3 months correlation between SunOpta and Procter is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of SunOpta i.e., SunOpta and Procter Gamble go up and down completely randomly.

Pair Corralation between SunOpta and Procter Gamble

Given the investment horizon of 90 days SunOpta is expected to generate 3.57 times more return on investment than Procter Gamble. However, SunOpta is 3.57 times more volatile than Procter Gamble. It trades about 0.01 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.04 per unit of risk. If you would invest  871.00  in SunOpta on October 7, 2024 and sell it today you would lose (85.00) from holding SunOpta or give up 9.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SunOpta  vs.  Procter Gamble

SunOpta

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 15 (%) 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.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SunOpta and Procter Gamble

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

The idea behind SunOpta and Procter Gamble 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.