Correlation Between SNDL and OrganiGram Holdings
Can any of the company-specific risk be diversified away by investing in both SNDL and OrganiGram Holdings 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 OrganiGram Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and OrganiGram Holdings, you can compare the effects of market volatilities on SNDL and OrganiGram Holdings 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 OrganiGram Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and OrganiGram Holdings.
Diversification Opportunities for SNDL and OrganiGram Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SNDL and OrganiGram is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings 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 OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of SNDL i.e., SNDL and OrganiGram Holdings go up and down completely randomly.
Pair Corralation between SNDL and OrganiGram Holdings
Given the investment horizon of 90 days SNDL Inc is expected to generate 0.88 times more return on investment than OrganiGram Holdings. However, SNDL Inc is 1.13 times less risky than OrganiGram Holdings. It trades about 0.0 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about -0.02 per unit of risk. If you would invest 283.00 in SNDL Inc on August 27, 2024 and sell it today you would lose (85.00) from holding SNDL Inc or give up 30.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. OrganiGram Holdings
Performance |
| Timeline |
| SNDL Inc |
| OrganiGram Holdings |
SNDL and OrganiGram Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and OrganiGram Holdings
The main advantage of trading using opposite SNDL and OrganiGram Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, OrganiGram Holdings 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 OrganiGram Holdings will offset losses from the drop in OrganiGram Holdings' long position.The idea behind SNDL Inc and OrganiGram Holdings 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.| OrganiGram Holdings vs. Cronos Group | OrganiGram Holdings vs. Aurora Cannabis | OrganiGram Holdings vs. SNDL Inc | OrganiGram Holdings vs. Canopy Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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