Correlation Between Arcadium Lithium and SNDL
Can any of the company-specific risk be diversified away by investing in both Arcadium Lithium and SNDL 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 Arcadium Lithium and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcadium Lithium plc and SNDL Inc, you can compare the effects of market volatilities on Arcadium Lithium and SNDL 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 Arcadium Lithium with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcadium Lithium and SNDL.
Diversification Opportunities for Arcadium Lithium and SNDL
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Arcadium and SNDL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Arcadium Lithium plc and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Arcadium Lithium 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 Arcadium Lithium plc are associated (or correlated) with SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Arcadium Lithium i.e., Arcadium Lithium and SNDL go up and down completely randomly.
Pair Corralation between Arcadium Lithium and SNDL
Given the investment horizon of 90 days Arcadium Lithium is expected to generate 3.55 times less return on investment than SNDL. In addition to that, Arcadium Lithium is 1.14 times more volatile than SNDL Inc. It trades about 0.01 of its total potential returns per unit of risk. SNDL Inc is currently generating about 0.05 per unit of volatility. If you would invest 145.00 in SNDL Inc on September 2, 2024 and sell it today you would earn a total of 48.00 from holding SNDL Inc or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arcadium Lithium plc vs. SNDL Inc
Performance |
| Timeline |
| Arcadium Lithium plc |
| SNDL Inc |
Arcadium Lithium and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcadium Lithium and SNDL
The main advantage of trading using opposite Arcadium Lithium and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcadium Lithium position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Arcadium Lithium vs. Japan Tobacco ADR | Arcadium Lithium vs. Compania Cervecerias Unidas | Arcadium Lithium vs. GoHealth | Arcadium Lithium vs. Palomar Holdings |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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