Correlation Between SunOpta and NORTHERN

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

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

Diversification Opportunities for SunOpta and NORTHERN

-0.06

Correlation Coefficient

SunOpta  NORTHERN

Good diversification

The 3 months correlation between SunOpta and NORTHERN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION 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 NORTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN TRUST PORATION has no effect on the direction of SunOpta i.e., SunOpta and NORTHERN go up and down completely randomly.

Pair Corralation between SunOpta and NORTHERN

Given the investment horizon of 90 days SunOpta is expected to under-perform the NORTHERN. In addition to that, SunOpta is 6.24 times more volatile than NORTHERN TRUST PORATION. It trades about -0.2 of its total potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about -0.02 per unit of volatility. If you would invest  8,626  in NORTHERN TRUST PORATION on October 26, 2024 and sell it today you would lose (10.00) from holding NORTHERN TRUST PORATION or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

SunOpta  vs.  NORTHERN TRUST PORATION

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.

NORTHERN TRUST PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TRUST PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORTHERN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SunOpta and NORTHERN

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

The idea behind SunOpta and NORTHERN TRUST PORATION 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.