Correlation Between SunOpta and Canon

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

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

Diversification Opportunities for SunOpta and Canon

0.17

Correlation Coefficient

SunOpta  Canon

Average diversification

The 3 months correlation between SunOpta and Canon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Canon Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc ADR 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 Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc ADR has no effect on the direction of SunOpta i.e., SunOpta and Canon go up and down completely randomly.

Pair Corralation between SunOpta and Canon

Given the investment horizon of 90 days SunOpta is expected to under-perform the Canon. In addition to that, SunOpta is 2.68 times more volatile than Canon Inc ADR. It trades about -0.03 of its total potential returns per unit of risk. Canon Inc ADR is currently generating about 0.04 per unit of volatility. If you would invest  2,085  in Canon Inc ADR on February 26, 2024 and sell it today you would earn a total of  105.00  from holding Canon Inc ADR or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	27.88%
Values	Daily Returns

SunOpta  vs.  Canon Inc ADR

SunOpta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Canon Inc ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canon Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Canon is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with SunOpta and Canon

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

The idea behind SunOpta and Canon Inc ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.