Correlation Between Winpak and SunOpta

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

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

Diversification Opportunities for Winpak and SunOpta

0.62

Correlation Coefficient

Winpak  SunOpta

Poor diversification

The 3 months correlation between Winpak and SunOpta is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Winpak 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 Winpak are associated (or correlated) with SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Winpak i.e., Winpak and SunOpta go up and down completely randomly.

Pair Corralation between Winpak and SunOpta

Assuming the 90 days trading horizon Winpak is expected to generate 2.88 times less return on investment than SunOpta. But when comparing it to its historical volatility, Winpak is 2.15 times less risky than SunOpta. It trades about 0.12 of its potential returns per unit of risk. SunOpta is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  872.00  in SunOpta on September 12, 2024 and sell it today you would earn a total of  251.00  from holding SunOpta or generate 28.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Winpak  vs.  SunOpta

Winpak

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SunOpta

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, SunOpta displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winpak and SunOpta

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

The idea behind Winpak and SunOpta 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.