Correlation Between NH Foods and SNDL
Can any of the company-specific risk be diversified away by investing in both NH Foods 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 NH Foods and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and SNDL Inc, you can compare the effects of market volatilities on NH Foods 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 NH Foods with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and SNDL.
Diversification Opportunities for NH Foods and SNDL
Pay attention - limited upside
The 3 months correlation between NIPMY and SNDL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and NH Foods 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 NH Foods Ltd 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 NH Foods i.e., NH Foods and SNDL go up and down completely randomly.
Pair Corralation between NH Foods and SNDL
Assuming the 90 days horizon NH Foods Ltd is expected to generate 0.18 times more return on investment than SNDL. However, NH Foods Ltd is 5.62 times less risky than SNDL. It trades about 0.1 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.01 per unit of risk. If you would invest 1,203 in NH Foods Ltd on August 28, 2024 and sell it today you would earn a total of 497.00 from holding NH Foods Ltd or generate 41.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH Foods Ltd vs. SNDL Inc
Performance |
| Timeline |
| NH Foods |
| SNDL Inc |
NH Foods and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and SNDL
The main advantage of trading using opposite NH Foods and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods 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.| NH Foods vs. Artisan Consumer Goods | NH Foods vs. The A2 Milk | NH Foods vs. BioAdaptives | NH Foods vs. General Mills |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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