Correlation Between SunOpta and NL Industries
Can any of the company-specific risk be diversified away by investing in both SunOpta and NL Industries 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 NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and NL Industries, you can compare the effects of market volatilities on SunOpta and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and NL Industries.
Diversification Opportunities for SunOpta and NL Industries
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SunOpta and NL Industries is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of SunOpta i.e., SunOpta and NL Industries go up and down completely randomly.
Pair Corralation between SunOpta and NL Industries
Given the investment horizon of 90 days SunOpta is expected to generate 1.11 times less return on investment than NL Industries. But when comparing it to its historical volatility, SunOpta is 1.02 times less risky than NL Industries. It trades about 0.08 of its potential returns per unit of risk. NL Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 479.00 in NL Industries on September 4, 2024 and sell it today you would earn a total of 342.00 from holding NL Industries or generate 71.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. NL Industries
Performance |
| Timeline |
| SunOpta |
| NL Industries |
SunOpta and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and NL Industries
The main advantage of trading using opposite SunOpta and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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