Correlation Between SunOpta and NRG Energy
Can any of the company-specific risk be diversified away by investing in both SunOpta and NRG Energy 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 NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and NRG Energy, you can compare the effects of market volatilities on SunOpta and NRG Energy 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 NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and NRG Energy.
Diversification Opportunities for SunOpta and NRG Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SunOpta and NRG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 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 NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of SunOpta i.e., SunOpta and NRG Energy go up and down completely randomly.
Pair Corralation between SunOpta and NRG Energy
Given the investment horizon of 90 days SunOpta is expected to generate 6.86 times less return on investment than NRG Energy. In addition to that, SunOpta is 1.68 times more volatile than NRG Energy. It trades about 0.01 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.13 per unit of volatility. If you would invest 3,132 in NRG Energy on September 3, 2024 and sell it today you would earn a total of 7,029 from holding NRG Energy or generate 224.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. NRG Energy
Performance |
| Timeline |
| SunOpta |
| NRG Energy |
SunOpta and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and NRG Energy
The main advantage of trading using opposite SunOpta and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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