Correlation Between SunOpta and Smart Digital

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

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

Diversification Opportunities for SunOpta and Smart Digital

0.25

Correlation Coefficient

SunOpta  Smart Digital

Modest diversification

The 3 months correlation between SunOpta and Smart is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group 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 Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of SunOpta i.e., SunOpta and Smart Digital go up and down completely randomly.

Pair Corralation between SunOpta and Smart Digital

Given the investment horizon of 90 days SunOpta is expected to generate 55.46 times less return on investment than Smart Digital. But when comparing it to its historical volatility, SunOpta is 4.52 times less risky than Smart Digital. It trades about 0.01 of its potential returns per unit of risk. Smart Digital Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  503.00  in Smart Digital Group on May 13, 2025 and sell it today you would earn a total of  514.00  from holding Smart Digital Group or generate 102.19% return on investment over 90 days.

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

SunOpta  vs.  Smart Digital Group

SunOpta

Risk-Adjusted Performance

Weakest

Over the last 90 days SunOpta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, SunOpta is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Smart Digital Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SunOpta and Smart Digital

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

The idea behind SunOpta and Smart Digital Group 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.