Correlation Between Old Republic and SunOpta
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and SunOpta, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and SunOpta.
Diversification Opportunities for Old Republic and SunOpta
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and SunOpta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Old Republic 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 Old Republic 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 Old Republic i.e., Old Republic and SunOpta go up and down completely randomly.
Pair Corralation between Old Republic and SunOpta
Considering the 90-day investment horizon Old Republic is expected to generate 2.1 times less return on investment than SunOpta. But when comparing it to its historical volatility, Old Republic International is 2.51 times less risky than SunOpta. It trades about 0.2 of its potential returns per unit of risk. SunOpta is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 638.00 in SunOpta on August 29, 2024 and sell it today you would earn a total of 141.00 from holding SunOpta or generate 22.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Old Republic International vs. SunOpta
Performance |
| Timeline |
| Old Republic Interna |
| SunOpta |
Old Republic and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and SunOpta
The main advantage of trading using opposite Old Republic and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Global Indemnity PLC | Old Republic vs. Erie Indemnity | Old Republic vs. AMERISAFE | Old Republic vs. Diamond Hill Investment |
| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products | SunOpta vs. Associated British Foods |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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