Correlation Between SNDL and Bank
Can any of the company-specific risk be diversified away by investing in both SNDL and Bank 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 Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Bank, you can compare the effects of market volatilities on SNDL and Bank 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 Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Bank.
Diversification Opportunities for SNDL and Bank
Average diversification
The 3 months correlation between SNDL and Bank is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank 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 Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank has no effect on the direction of SNDL i.e., SNDL and Bank go up and down completely randomly.
Pair Corralation between SNDL and Bank
If you would invest 189.00 in Bank on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
SNDL Inc vs. Bank
Performance |
| Timeline |
| SNDL Inc |
| Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SNDL and Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Bank
The main advantage of trading using opposite SNDL and Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Bank 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 Bank will offset losses from the drop in Bank's long position.The idea behind SNDL Inc and Bank 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.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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