Correlation Between SNDL and Catalent
Can any of the company-specific risk be diversified away by investing in both SNDL and Catalent 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 Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Catalent, you can compare the effects of market volatilities on SNDL and Catalent 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 Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Catalent.
Diversification Opportunities for SNDL and Catalent
Very good diversification
The 3 months correlation between SNDL and Catalent is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of SNDL i.e., SNDL and Catalent go up and down completely randomly.
Pair Corralation between SNDL and Catalent
Given the investment horizon of 90 days SNDL Inc is expected to generate 5.14 times more return on investment than Catalent. However, SNDL is 5.14 times more volatile than Catalent. It trades about 0.01 of its potential returns per unit of risk. Catalent is currently generating about 0.02 per unit of risk. If you would invest 197.00 in SNDL Inc on September 2, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Catalent
Performance |
| Timeline |
| SNDL Inc |
| Catalent |
SNDL and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Catalent
The main advantage of trading using opposite SNDL and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.The idea behind SNDL Inc and Catalent 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.| Catalent vs. Crinetics Pharmaceuticals | Catalent vs. Enanta Pharmaceuticals | Catalent vs. Amicus Therapeutics | Catalent vs. Connect Biopharma Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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