Correlation Between Semtech and SunOpta
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and SunOpta, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and SunOpta.
Diversification Opportunities for Semtech and SunOpta
Poor diversification
The 3 months correlation between Semtech and SunOpta is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Semtech 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 Semtech 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 Semtech i.e., Semtech and SunOpta go up and down completely randomly.
Pair Corralation between Semtech and SunOpta
Given the investment horizon of 90 days Semtech is expected to generate 2.37 times more return on investment than SunOpta. However, Semtech is 2.37 times more volatile than SunOpta. It trades about 0.41 of its potential returns per unit of risk. SunOpta is currently generating about 0.3 per unit of risk. If you would invest 4,392 in Semtech on September 4, 2024 and sell it today you would earn a total of 2,303 from holding Semtech or generate 52.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. SunOpta
Performance |
| Timeline |
| Semtech |
| SunOpta |
Semtech and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and SunOpta
The main advantage of trading using opposite Semtech and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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