Correlation Between SunOpta and BKV

Can any of the company-specific risk be diversified away by investing in both SunOpta and BKV 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 BKV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SunOpta and BKV Corporation, you can compare the effects of market volatilities on SunOpta and BKV 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 BKV. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and BKV.

Diversification Opportunities for SunOpta and BKV

0.77

Correlation Coefficient

SunOpta  BKV

Poor diversification

The 3 months correlation between SunOpta and BKV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and BKV Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKV Corporation 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 BKV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKV Corporation has no effect on the direction of SunOpta i.e., SunOpta and BKV go up and down completely randomly.

Pair Corralation between SunOpta and BKV

Given the investment horizon of 90 days SunOpta is expected to generate 1.55 times less return on investment than BKV. But when comparing it to its historical volatility, SunOpta is 1.13 times less risky than BKV. It trades about 0.08 of its potential returns per unit of risk. BKV Corporation is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,119  in BKV Corporation on September 21, 2024 and sell it today you would earn a total of  94.00  from holding BKV Corporation or generate 4.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

SunOpta  vs.  BKV Corp.

SunOpta

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

BKV Corporation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunOpta and BKV

The main advantage of trading using opposite SunOpta and BKV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, BKV 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 BKV will offset losses from the drop in BKV's long position.

The idea behind SunOpta and BKV Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.