Correlation Between SunOpta and Nomad Foods
Can any of the company-specific risk be diversified away by investing in both SunOpta and Nomad Foods 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 Nomad Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Nomad Foods, you can compare the effects of market volatilities on SunOpta and Nomad Foods 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 Nomad Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Nomad Foods.
Diversification Opportunities for SunOpta and Nomad Foods
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SunOpta and Nomad is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Nomad Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomad Foods 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 Nomad Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomad Foods has no effect on the direction of SunOpta i.e., SunOpta and Nomad Foods go up and down completely randomly.
Pair Corralation between SunOpta and Nomad Foods
Given the investment horizon of 90 days SunOpta is expected to generate 8.62 times less return on investment than Nomad Foods. But when comparing it to its historical volatility, SunOpta is 1.5 times less risky than Nomad Foods. It trades about 0.05 of its potential returns per unit of risk. Nomad Foods is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,601 in Nomad Foods on November 9, 2024 and sell it today you would earn a total of 182.00 from holding Nomad Foods or generate 11.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SunOpta vs. Nomad Foods
Performance |
| Timeline |
| SunOpta |
| Nomad Foods |
SunOpta and Nomad Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Nomad Foods
The main advantage of trading using opposite SunOpta and Nomad Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Nomad Foods 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 Nomad Foods will offset losses from the drop in Nomad Foods' long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| Nomad Foods vs. Lancaster Colony | Nomad Foods vs. Treehouse Foods | Nomad Foods vs. John B Sanfilippo | Nomad Foods vs. Seneca Foods Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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