Correlation Between SunOpta and Direct Line
Can any of the company-specific risk be diversified away by investing in both SunOpta and Direct Line 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 Direct Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Direct Line Insurance, you can compare the effects of market volatilities on SunOpta and Direct Line 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 Direct Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Direct Line.
Diversification Opportunities for SunOpta and Direct Line
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SunOpta and Direct is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Direct Line Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Line Insurance 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 Direct Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Line Insurance has no effect on the direction of SunOpta i.e., SunOpta and Direct Line go up and down completely randomly.
Pair Corralation between SunOpta and Direct Line
Given the investment horizon of 90 days SunOpta is expected to generate 0.89 times more return on investment than Direct Line. However, SunOpta is 1.13 times less risky than Direct Line. It trades about 0.16 of its potential returns per unit of risk. Direct Line Insurance is currently generating about -0.02 per unit of risk. If you would invest 638.00 in SunOpta on August 31, 2024 and sell it today you would earn a total of 143.00 from holding SunOpta or generate 22.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. Direct Line Insurance
Performance |
| Timeline |
| SunOpta |
| Direct Line Insurance |
SunOpta and Direct Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Direct Line
The main advantage of trading using opposite SunOpta and Direct Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Direct Line 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 Direct Line will offset losses from the drop in Direct Line's long position.| SunOpta vs. Central Garden Pet | SunOpta vs. Bridgford Foods | SunOpta vs. Lancaster Colony | SunOpta vs. HUMANA INC |
| Direct Line vs. Commonwealth Bank of | Direct Line vs. Barings BDC | Direct Line vs. PennantPark Floating Rate | Direct Line vs. SunOpta |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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