Correlation Between SNDL and Enlight Renewable
Can any of the company-specific risk be diversified away by investing in both SNDL and Enlight Renewable 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 Enlight Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Enlight Renewable Energy, you can compare the effects of market volatilities on SNDL and Enlight Renewable 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 Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Enlight Renewable.
Diversification Opportunities for SNDL and Enlight Renewable
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between SNDL and Enlight is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of SNDL i.e., SNDL and Enlight Renewable go up and down completely randomly.
Pair Corralation between SNDL and Enlight Renewable
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Enlight Renewable. In addition to that, SNDL is 1.44 times more volatile than Enlight Renewable Energy. It trades about -0.07 of its total potential returns per unit of risk. Enlight Renewable Energy is currently generating about 0.01 per unit of volatility. If you would invest 1,600 in Enlight Renewable Energy on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Enlight Renewable Energy or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Enlight Renewable Energy
Performance |
| Timeline |
| SNDL Inc |
| Enlight Renewable Energy |
SNDL and Enlight Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Enlight Renewable
The main advantage of trading using opposite SNDL and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Enlight Renewable 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 Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.The idea behind SNDL Inc and Enlight Renewable Energy 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.| Enlight Renewable vs. Marchex | Enlight Renewable vs. Organic Sales and | Enlight Renewable vs. BorgWarner | Enlight Renewable vs. Global E Online |
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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