Correlation Between Canopy Growth and SNDL
Can any of the company-specific risk be diversified away by investing in both Canopy Growth 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 Canopy Growth and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canopy Growth Corp and SNDL Inc, you can compare the effects of market volatilities on Canopy Growth 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 Canopy Growth with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canopy Growth and SNDL.
Diversification Opportunities for Canopy Growth and SNDL
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canopy and SNDL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Canopy Growth Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Canopy Growth 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 Canopy Growth Corp 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 Canopy Growth i.e., Canopy Growth and SNDL go up and down completely randomly.
Pair Corralation between Canopy Growth and SNDL
Considering the 90-day investment horizon Canopy Growth Corp is expected to under-perform the SNDL. In addition to that, Canopy Growth is 1.53 times more volatile than SNDL Inc. It trades about -0.21 of its total potential returns per unit of risk. SNDL Inc is currently generating about -0.1 per unit of volatility. If you would invest 221.00 in SNDL Inc on August 27, 2024 and sell it today you would lose (23.00) from holding SNDL Inc or give up 10.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canopy Growth Corp vs. SNDL Inc
Performance |
| Timeline |
| Canopy Growth Corp |
| SNDL Inc |
Canopy Growth and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canopy Growth and SNDL
The main advantage of trading using opposite Canopy Growth and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canopy Growth 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.| Canopy Growth vs. Aldel Financial II | Canopy Growth vs. Highway Holdings Limited | Canopy Growth vs. Inflection Point Acquisition | Canopy Growth vs. Barrick Gold Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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