Correlation Between SunOpta and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both SunOpta and Fomento Economico 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 Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and Fomento Economico Mexicano, you can compare the effects of market volatilities on SunOpta and Fomento Economico 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 Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and Fomento Economico.
Diversification Opportunities for SunOpta and Fomento Economico
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SunOpta and Fomento is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of SunOpta i.e., SunOpta and Fomento Economico go up and down completely randomly.
Pair Corralation between SunOpta and Fomento Economico
Given the investment horizon of 90 days SunOpta is expected to generate 2.08 times more return on investment than Fomento Economico. However, SunOpta is 2.08 times more volatile than Fomento Economico Mexicano. It trades about 0.09 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.14 per unit of risk. If you would invest 675.00 in SunOpta on September 23, 2024 and sell it today you would earn a total of 98.00 from holding SunOpta or generate 14.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SunOpta vs. Fomento Economico Mexicano
Performance |
Timeline |
SunOpta |
Fomento Economico |
SunOpta and Fomento Economico Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SunOpta and Fomento Economico
The main advantage of trading using opposite SunOpta and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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