Correlation Between SunOpta and Linamar
Can any of the company-specific risk be diversified away by investing in both SunOpta and Linamar 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 SunOpta and Linamar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Linamar, you can compare the effects of market volatilities on SunOpta and Linamar 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 SunOpta with a short position of Linamar. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Linamar.
Diversification Opportunities for SunOpta and Linamar
Very good diversification
The 3 months correlation between SunOpta and Linamar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Linamar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linamar and SunOpta 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 SunOpta are associated (or correlated) with Linamar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linamar has no effect on the direction of SunOpta i.e., SunOpta and Linamar go up and down completely randomly.
Pair Corralation between SunOpta and Linamar
Assuming the 90 days trading horizon SunOpta is expected to generate 1.91 times more return on investment than Linamar. However, SunOpta is 1.91 times more volatile than Linamar. It trades about 0.42 of its potential returns per unit of risk. Linamar is currently generating about -0.03 per unit of risk. If you would invest 794.00 in SunOpta on August 24, 2024 and sell it today you would earn a total of 285.00 from holding SunOpta or generate 35.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SunOpta vs. Linamar
Performance |
Timeline |
SunOpta |
Linamar |
SunOpta and Linamar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SunOpta and Linamar
The main advantage of trading using opposite SunOpta and Linamar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Linamar 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 Linamar will offset losses from the drop in Linamar's long position.SunOpta vs. Winpak | SunOpta vs. Canaccord Genuity Group | SunOpta vs. Altus Group Limited | SunOpta vs. Martinrea International |
Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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