Correlation Between SunOpta and Darling Ingredients
Can any of the company-specific risk be diversified away by investing in both SunOpta and Darling Ingredients 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 Darling Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Darling Ingredients, you can compare the effects of market volatilities on SunOpta and Darling Ingredients 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 Darling Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Darling Ingredients.
Diversification Opportunities for SunOpta and Darling Ingredients
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SunOpta and Darling is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Darling Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darling Ingredients 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 Darling Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darling Ingredients has no effect on the direction of SunOpta i.e., SunOpta and Darling Ingredients go up and down completely randomly.
Pair Corralation between SunOpta and Darling Ingredients
Given the investment horizon of 90 days SunOpta is expected to under-perform the Darling Ingredients. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 1.39 times less risky than Darling Ingredients. The stock trades about -0.16 of its potential returns per unit of risk. The Darling Ingredients is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,338 in Darling Ingredients on October 23, 2024 and sell it today you would earn a total of 326.00 from holding Darling Ingredients or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
SunOpta vs. Darling Ingredients
Performance |
| Timeline |
| SunOpta |
| Darling Ingredients |
SunOpta and Darling Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Darling Ingredients
The main advantage of trading using opposite SunOpta and Darling Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Darling Ingredients 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 Darling Ingredients will offset losses from the drop in Darling Ingredients' long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| Darling Ingredients vs. J J Snack | Darling Ingredients vs. Post Holdings | Darling Ingredients vs. The Hain Celestial | Darling Ingredients vs. Bellring Brands LLC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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