Correlation Between SNDL and Federal National
Can any of the company-specific risk be diversified away by investing in both SNDL and Federal National 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 Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Federal National Mortgage, you can compare the effects of market volatilities on SNDL and Federal National 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 Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Federal National.
Diversification Opportunities for SNDL and Federal National
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SNDL and Federal is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage 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 Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of SNDL i.e., SNDL and Federal National go up and down completely randomly.
Pair Corralation between SNDL and Federal National
Given the investment horizon of 90 days SNDL is expected to generate 9.98 times less return on investment than Federal National. But when comparing it to its historical volatility, SNDL Inc is 1.34 times less risky than Federal National. It trades about 0.01 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Federal National Mortgage on August 27, 2024 and sell it today you would earn a total of 274.00 from holding Federal National Mortgage or generate 582.98% 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. Federal National Mortgage
Performance |
| Timeline |
| SNDL Inc |
| Federal National Mortgage |
SNDL and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Federal National
The main advantage of trading using opposite SNDL and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.The idea behind SNDL Inc and Federal National Mortgage 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.| Federal National vs. Solstad Offshore ASA | Federal National vs. Playstudios | Federal National vs. Ryanair Holdings PLC | Federal National vs. Mayfair Gold Corp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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