Correlation Between SunOpta and Cars
Can any of the company-specific risk be diversified away by investing in both SunOpta and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Cars Inc, you can compare the effects of market volatilities on SunOpta and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Cars.
Diversification Opportunities for SunOpta and Cars
Poor diversification
The 3 months correlation between SunOpta and Cars is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of SunOpta i.e., SunOpta and Cars go up and down completely randomly.
Pair Corralation between SunOpta and Cars
Given the investment horizon of 90 days SunOpta is expected to generate 1.39 times more return on investment than Cars. However, SunOpta is 1.39 times more volatile than Cars Inc. It trades about 0.4 of its potential returns per unit of risk. Cars Inc is currently generating about 0.37 per unit of risk. If you would invest 598.00 in SunOpta on August 27, 2024 and sell it today you would earn a total of 184.00 from holding SunOpta or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. Cars Inc
Performance |
| Timeline |
| SunOpta |
| Cars Inc |
SunOpta and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Cars
The main advantage of trading using opposite SunOpta and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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