Correlation Between SunOpta and Coca Cola

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

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

Diversification Opportunities for SunOpta and Coca Cola

-0.76

Correlation Coefficient

SunOpta  Coca Cola

Pay attention - limited upside

The 3 months correlation between SunOpta and Coca is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of SunOpta i.e., SunOpta and Coca Cola go up and down completely randomly.

Pair Corralation between SunOpta and Coca Cola

Given the investment horizon of 90 days SunOpta is expected to generate 1.86 times more return on investment than Coca Cola. However, SunOpta is 1.86 times more volatile than The Coca Cola. It trades about 0.01 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.11 per unit of risk. If you would invest  772.00  in SunOpta on September 24, 2024 and sell it today you would earn a total of  1.00  from holding SunOpta or generate 0.13% return on investment over 90 days.

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

SunOpta  vs.  The Coca Cola

SunOpta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SunOpta are ranked lower than 7 (%) 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.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SunOpta and Coca Cola

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

The idea behind SunOpta and The Coca Cola 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.