Correlation Between SunOpta and Beyond Meat

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

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

Diversification Opportunities for SunOpta and Beyond Meat

-0.17

Correlation Coefficient

SunOpta  Beyond Meat

Good diversification

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

Pair Corralation between SunOpta and Beyond Meat

Given the investment horizon of 90 days SunOpta is expected to generate 0.95 times more return on investment than Beyond Meat. However, SunOpta is 1.05 times less risky than Beyond Meat. It trades about 0.24 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.3 per unit of risk. If you would invest  637.00  in SunOpta on August 15, 2024 and sell it today you would earn a total of  124.00  from holding SunOpta or generate 19.47% return on investment over 90 days.

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

SunOpta  vs.  Beyond Meat

SunOpta

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, SunOpta disclosed solid returns over the last few months and may actually be approaching a breakup point.

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SunOpta and Beyond Meat

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

The idea behind SunOpta and Beyond Meat 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 Stocks Directory module to find actively traded stocks across global markets.