Correlation Between Natural Alternatives and SunOpta
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives 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 Natural Alternatives and SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and SunOpta, you can compare the effects of market volatilities on Natural Alternatives 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 Natural Alternatives with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and SunOpta.
Diversification Opportunities for Natural Alternatives and SunOpta
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Natural and SunOpta is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Natural Alternatives 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 Natural Alternatives International 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 Natural Alternatives i.e., Natural Alternatives and SunOpta go up and down completely randomly.
Pair Corralation between Natural Alternatives and SunOpta
Given the investment horizon of 90 days Natural Alternatives International is expected to under-perform the SunOpta. But the stock apears to be less risky and, when comparing its historical volatility, Natural Alternatives International is 1.49 times less risky than SunOpta. The stock trades about -0.09 of its potential returns per unit of risk. The SunOpta is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 598.00 in SunOpta on August 28, 2024 and sell it today you would earn a total of 174.00 from holding SunOpta or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Alternatives Internati vs. SunOpta
Performance |
| Timeline |
| Natural Alternatives |
| SunOpta |
Natural Alternatives and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Alternatives and SunOpta
The main advantage of trading using opposite Natural Alternatives and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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.| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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