Correlation Between SNDL and Arkema SA
Can any of the company-specific risk be diversified away by investing in both SNDL and Arkema SA 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 SNDL and Arkema SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Arkema SA, you can compare the effects of market volatilities on SNDL and Arkema SA 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 SNDL with a short position of Arkema SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Arkema SA.
Diversification Opportunities for SNDL and Arkema SA
Very good diversification
The 3 months correlation between SNDL and Arkema is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Arkema SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkema SA and SNDL 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 SNDL Inc are associated (or correlated) with Arkema SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkema SA has no effect on the direction of SNDL i.e., SNDL and Arkema SA go up and down completely randomly.
Pair Corralation between SNDL and Arkema SA
Given the investment horizon of 90 days SNDL Inc is expected to generate 6.02 times more return on investment than Arkema SA. However, SNDL is 6.02 times more volatile than Arkema SA. It trades about 0.01 of its potential returns per unit of risk. Arkema SA is currently generating about -0.12 per unit of risk. If you would invest 197.00 in SNDL Inc on September 3, 2024 and sell it today you would lose (4.00) from holding SNDL Inc or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Arkema SA
Performance |
| Timeline |
| SNDL Inc |
| Arkema SA |
SNDL and Arkema SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Arkema SA
The main advantage of trading using opposite SNDL and Arkema SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Arkema SA 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 Arkema SA will offset losses from the drop in Arkema SA's long position.The idea behind SNDL Inc and Arkema SA 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.| Arkema SA vs. Sherwin Williams Co | Arkema SA vs. Air Liquide SA | Arkema SA vs. LAir Liquide SA | Arkema SA vs. Air Products and |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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