Correlation Between SunOpta and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both SunOpta and Renesas Electronics 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 Renesas Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Renesas Electronics, you can compare the effects of market volatilities on SunOpta and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Renesas Electronics.
Diversification Opportunities for SunOpta and Renesas Electronics
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between SunOpta and Renesas is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of SunOpta i.e., SunOpta and Renesas Electronics go up and down completely randomly.
Pair Corralation between SunOpta and Renesas Electronics
Given the investment horizon of 90 days SunOpta is expected to under-perform the Renesas Electronics. But the stock apears to be less risky and, when comparing its historical volatility, SunOpta is 1.96 times less risky than Renesas Electronics. The stock trades about -0.14 of its potential returns per unit of risk. The Renesas Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,305 in Renesas Electronics on November 3, 2024 and sell it today you would earn a total of 0.00 from holding Renesas Electronics or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. Renesas Electronics
Performance |
| Timeline |
| SunOpta |
| Renesas Electronics |
SunOpta and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Renesas Electronics
The main advantage of trading using opposite SunOpta and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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