Correlation Between SunOpta and Pilgrims Pride

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

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

Diversification Opportunities for SunOpta and Pilgrims Pride

0.4

Correlation Coefficient

SunOpta  Pilgrims Pride

Very weak diversification

The 3 months correlation between SunOpta and Pilgrims is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Pilgrims Pride Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilgrims Pride Corp 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 Pilgrims Pride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilgrims Pride Corp has no effect on the direction of SunOpta i.e., SunOpta and Pilgrims Pride go up and down completely randomly.

Pair Corralation between SunOpta and Pilgrims Pride

Given the investment horizon of 90 days SunOpta is expected to generate 4.49 times less return on investment than Pilgrims Pride. In addition to that, SunOpta is 1.94 times more volatile than Pilgrims Pride Corp. It trades about 0.01 of its total potential returns per unit of risk. Pilgrims Pride Corp is currently generating about 0.08 per unit of volatility. If you would invest  2,379  in Pilgrims Pride Corp on October 21, 2024 and sell it today you would earn a total of  2,151  from holding Pilgrims Pride Corp or generate 90.42% return on investment over 90 days.

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

SunOpta  vs.  Pilgrims Pride Corp

SunOpta

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 11 (%) 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.

Pilgrims Pride Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pilgrims Pride Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pilgrims Pride is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SunOpta and Pilgrims Pride

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

The idea behind SunOpta and Pilgrims Pride Corp 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.