Correlation Between SNDL and Nike
Can any of the company-specific risk be diversified away by investing in both SNDL and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Nike Inc, you can compare the effects of market volatilities on SNDL and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Nike.
Diversification Opportunities for SNDL and Nike
Good diversification
The 3 months correlation between SNDL and Nike is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of SNDL i.e., SNDL and Nike go up and down completely randomly.
Pair Corralation between SNDL and Nike
Given the investment horizon of 90 days SNDL Inc is expected to generate 1.24 times more return on investment than Nike. However, SNDL is 1.24 times more volatile than Nike Inc. It trades about -0.01 of its potential returns per unit of risk. Nike Inc is currently generating about -0.04 per unit of risk. If you would invest 216.00 in SNDL Inc on September 3, 2024 and sell it today you would lose (22.00) from holding SNDL Inc or give up 10.19% 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. Nike Inc
Performance |
| Timeline |
| SNDL Inc |
| Nike Inc |
SNDL and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Nike
The main advantage of trading using opposite SNDL and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.The idea behind SNDL Inc and Nike Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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