Correlation Between PACIFIC and SunOpta

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

By analyzing existing cross correlation between PACIFIC GAS AND and SunOpta, you can compare the effects of market volatilities on PACIFIC and SunOpta 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 PACIFIC with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and SunOpta.

Diversification Opportunities for PACIFIC and SunOpta

0.41

Correlation Coefficient

PACIFIC  SunOpta

Very weak diversification

The 3 months correlation between PACIFIC and SunOpta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and PACIFIC 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 PACIFIC GAS AND are associated (or correlated) with SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of PACIFIC i.e., PACIFIC and SunOpta go up and down completely randomly.

Pair Corralation between PACIFIC and SunOpta

Assuming the 90 days trading horizon PACIFIC is expected to generate 81.25 times less return on investment than SunOpta. But when comparing it to its historical volatility, PACIFIC GAS AND is 12.72 times less risky than SunOpta. It trades about 0.03 of its potential returns per unit of risk. SunOpta is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  605.00  in SunOpta on October 8, 2024 and sell it today you would earn a total of  181.00  from holding SunOpta or generate 29.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

PACIFIC GAS AND  vs.  SunOpta

PACIFIC GAS AND

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

SunOpta

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 13 (%) 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.

Pair Trading with PACIFIC and SunOpta

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

The idea behind PACIFIC GAS AND and SunOpta 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.