Correlation Between SunOpta and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both SunOpta and FARO Technologies 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 FARO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and FARO Technologies, you can compare the effects of market volatilities on SunOpta and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and FARO Technologies.
Diversification Opportunities for SunOpta and FARO Technologies
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SunOpta and FARO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of SunOpta i.e., SunOpta and FARO Technologies go up and down completely randomly.
Pair Corralation between SunOpta and FARO Technologies
Given the investment horizon of 90 days SunOpta is expected to generate 1.24 times less return on investment than FARO Technologies. But when comparing it to its historical volatility, SunOpta is 1.17 times less risky than FARO Technologies. It trades about 0.01 of its potential returns per unit of risk. FARO Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,141 in FARO Technologies on September 2, 2024 and sell it today you would lose (516.00) from holding FARO Technologies or give up 16.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. FARO Technologies
Performance |
| Timeline |
| SunOpta |
| FARO Technologies |
SunOpta and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and FARO Technologies
The main advantage of trading using opposite SunOpta and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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