Correlation Between SunOpta and Uranium Energy

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

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

Diversification Opportunities for SunOpta and Uranium Energy

0.83

Correlation Coefficient

SunOpta  Uranium Energy

Very poor diversification

The 3 months correlation between SunOpta and Uranium is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Uranium Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uranium Energy 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 Uranium Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uranium Energy Corp has no effect on the direction of SunOpta i.e., SunOpta and Uranium Energy go up and down completely randomly.

Pair Corralation between SunOpta and Uranium Energy

Given the investment horizon of 90 days SunOpta is expected to under-perform the Uranium Energy. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 1.52 times less risky than Uranium Energy. The stock trades about -0.2 of its potential returns per unit of risk. The Uranium Energy Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  720.00  in Uranium Energy Corp on December 21, 2024 and sell it today you would lose (158.00) from holding Uranium Energy Corp or give up 21.94% of portfolio value over 90 days.

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

SunOpta  vs.  Uranium Energy Corp

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Uranium Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Uranium Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SunOpta and Uranium Energy

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

The idea behind SunOpta and Uranium Energy 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.