Correlation Between PACCAR and SunOpta
Can any of the company-specific risk be diversified away by investing in both PACCAR 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 PACCAR and SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and SunOpta, you can compare the effects of market volatilities on PACCAR 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 PACCAR with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and SunOpta.
Diversification Opportunities for PACCAR and SunOpta
Poor diversification
The 3 months correlation between PACCAR and SunOpta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and PACCAR 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 PACCAR Inc 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 PACCAR i.e., PACCAR and SunOpta go up and down completely randomly.
Pair Corralation between PACCAR and SunOpta
Given the investment horizon of 90 days PACCAR is expected to generate 1.22 times less return on investment than SunOpta. In addition to that, PACCAR is 1.01 times more volatile than SunOpta. It trades about 0.26 of its total potential returns per unit of risk. SunOpta is currently generating about 0.32 per unit of volatility. If you would invest 675.00 in SunOpta on September 3, 2024 and sell it today you would earn a total of 100.00 from holding SunOpta or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PACCAR Inc vs. SunOpta
Performance |
| Timeline |
| PACCAR Inc |
| SunOpta |
PACCAR and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PACCAR and SunOpta
The main advantage of trading using opposite PACCAR and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR 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.| PACCAR vs. Manitowoc | PACCAR vs. Alamo Group | PACCAR vs. AGCO Corporation | PACCAR vs. Hyster Yale Materials Handling |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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