Correlation Between Colgate Palmolive and SunOpta

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

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

Diversification Opportunities for Colgate Palmolive and SunOpta

0.16

Correlation Coefficient

Colgate Palmolive  SunOpta

Average diversification

The 3 months correlation between Colgate and SunOpta is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Colgate Palmolive 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 Colgate Palmolive 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 Colgate Palmolive i.e., Colgate Palmolive and SunOpta go up and down completely randomly.

Pair Corralation between Colgate Palmolive and SunOpta

Allowing for the 90-day total investment horizon Colgate Palmolive is expected to under-perform the SunOpta. But the stock apears to be less risky and, when comparing its historical volatility, Colgate Palmolive is 3.11 times less risky than SunOpta. The stock trades about -0.11 of its potential returns per unit of risk. The SunOpta is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  601.00  in SunOpta on May 21, 2025 and sell it today you would earn a total of  26.00  from holding SunOpta or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Colgate Palmolive  vs.  SunOpta

Colgate Palmolive

Risk-Adjusted Performance

Weakest

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

SunOpta

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Colgate Palmolive and SunOpta

The main advantage of trading using opposite Colgate Palmolive and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive 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 Colgate Palmolive 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.