Correlation Between Microsoft and SunOpta

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

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

Diversification Opportunities for Microsoft and SunOpta

0.85

Correlation Coefficient

Microsoft  SunOpta

Very poor diversification

The 3 months correlation between Microsoft and SunOpta is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and SunOpta go up and down completely randomly.

Pair Corralation between Microsoft and SunOpta

Given the investment horizon of 90 days Microsoft is expected to generate 0.57 times more return on investment than SunOpta. However, Microsoft is 1.77 times less risky than SunOpta. It trades about -0.15 of its potential returns per unit of risk. SunOpta is currently generating about -0.31 per unit of risk. If you would invest  42,152  in Microsoft on January 7, 2025 and sell it today you would lose (6,366) from holding Microsoft or give up 15.1% of portfolio value over 90 days.

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

Microsoft  vs.  SunOpta

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SunOpta

Risk-Adjusted Performance

Very Weak

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Microsoft and SunOpta

The main advantage of trading using opposite Microsoft and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.