Correlation Between Encore Wire and SunOpta
Can any of the company-specific risk be diversified away by investing in both Encore Wire 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 Encore Wire and SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Wire and SunOpta, you can compare the effects of market volatilities on Encore Wire 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 Encore Wire with a short position of SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and SunOpta.
Diversification Opportunities for Encore Wire and SunOpta
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Encore and SunOpta is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Encore Wire 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 Encore Wire 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 Encore Wire i.e., Encore Wire and SunOpta go up and down completely randomly.
Pair Corralation between Encore Wire and SunOpta
Given the investment horizon of 90 days Encore Wire is expected to generate 0.76 times more return on investment than SunOpta. However, Encore Wire is 1.32 times less risky than SunOpta. It trades about 0.24 of its potential returns per unit of risk. SunOpta is currently generating about 0.09 per unit of risk. If you would invest 22,039 in Encore Wire on January 24, 2024 and sell it today you would earn a total of 6,270 from holding Encore Wire or generate 28.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Encore Wire vs. SunOpta
Performance |
Timeline |
Encore Wire |
SunOpta |
Encore Wire and SunOpta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Encore Wire and SunOpta
The main advantage of trading using opposite Encore Wire and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Wire 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.Encore Wire vs. Advanced Energy Industries | Encore Wire vs. Kimball Electronics | Encore Wire vs. Energizer Holdings |
SunOpta vs. Bunge Limited | SunOpta vs. Archer Daniels Midland | SunOpta vs. Fresh Del Monte | SunOpta vs. Limoneira Co |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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