Correlation Between SunOpta and Semtech
Can any of the company-specific risk be diversified away by investing in both SunOpta and Semtech 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 Semtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Semtech, you can compare the effects of market volatilities on SunOpta and Semtech 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 Semtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Semtech.
Diversification Opportunities for SunOpta and Semtech
Poor diversification
The 3 months correlation between SunOpta and Semtech is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech 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 Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of SunOpta i.e., SunOpta and Semtech go up and down completely randomly.
Pair Corralation between SunOpta and Semtech
Given the investment horizon of 90 days SunOpta is expected to generate 1.41 times less return on investment than Semtech. But when comparing it to its historical volatility, SunOpta is 1.08 times less risky than Semtech. It trades about 0.15 of its potential returns per unit of risk. Semtech is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,248 in Semtech on September 4, 2024 and sell it today you would earn a total of 2,447 from holding Semtech or generate 57.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. Semtech
Performance |
| Timeline |
| SunOpta |
| Semtech |
SunOpta and Semtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and Semtech
The main advantage of trading using opposite SunOpta and Semtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Semtech 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 Semtech will offset losses from the drop in Semtech's long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |