Correlation Between SunOpta and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both SunOpta and Century Aluminum 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 Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Century Aluminum, you can compare the effects of market volatilities on SunOpta and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Century Aluminum.
Diversification Opportunities for SunOpta and Century Aluminum
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SunOpta and Century is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of SunOpta i.e., SunOpta and Century Aluminum go up and down completely randomly.
Pair Corralation between SunOpta and Century Aluminum
Given the investment horizon of 90 days SunOpta is expected to generate 0.49 times more return on investment than Century Aluminum. However, SunOpta is 2.03 times less risky than Century Aluminum. It trades about 0.09 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.03 per unit of risk. If you would invest 761.00 in SunOpta on September 13, 2024 and sell it today you would earn a total of 20.00 from holding SunOpta or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. Century Aluminum
Performance |
| Timeline |
| SunOpta |
| Century Aluminum |
SunOpta and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Century Aluminum
The main advantage of trading using opposite SunOpta and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| Century Aluminum vs. Kaiser Aluminum | Century Aluminum vs. Commercial Metals | Century Aluminum vs. Steel Dynamics | Century Aluminum vs. Reliance Steel Aluminum |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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