Correlation Between Precision Drilling and SNDL
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and SNDL Inc, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and SNDL.
Diversification Opportunities for Precision Drilling and SNDL
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Precision and SNDL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and SNDL go up and down completely randomly.
Pair Corralation between Precision Drilling and SNDL
Considering the 90-day investment horizon Precision Drilling is expected to generate 2.0 times less return on investment than SNDL. But when comparing it to its historical volatility, Precision Drilling is 1.81 times less risky than SNDL. It trades about 0.04 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. SNDL Inc
Performance |
| Timeline |
| Precision Drilling |
| SNDL Inc |
Precision Drilling and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and SNDL
The main advantage of trading using opposite Precision Drilling and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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.| Precision Drilling vs. Borr Drilling | Precision Drilling vs. Patterson UTI Energy | Precision Drilling vs. Noble plc | Precision Drilling vs. Helmerich and Payne |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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