Correlation Between SNDL and OMDA Oil
Can any of the company-specific risk be diversified away by investing in both SNDL and OMDA Oil 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 OMDA Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and OMDA Oil and, you can compare the effects of market volatilities on SNDL and OMDA Oil 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 OMDA Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and OMDA Oil.
Diversification Opportunities for SNDL and OMDA Oil
Pay attention - limited upside
The 3 months correlation between SNDL and OMDA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and OMDA Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OMDA Oil 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 OMDA Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OMDA Oil has no effect on the direction of SNDL i.e., SNDL and OMDA Oil go up and down completely randomly.
Pair Corralation between SNDL and OMDA Oil
Given the investment horizon of 90 days SNDL is expected to generate 71.16 times less return on investment than OMDA Oil. But when comparing it to its historical volatility, SNDL Inc is 10.82 times less risky than OMDA Oil. It trades about 0.01 of its potential returns per unit of risk. OMDA Oil and is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.01 in OMDA Oil and on September 2, 2024 and sell it today you would earn a total of 0.00 from holding OMDA Oil and or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. OMDA Oil and
Performance |
| Timeline |
| SNDL Inc |
| OMDA Oil |
SNDL and OMDA Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and OMDA Oil
The main advantage of trading using opposite SNDL and OMDA Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, OMDA Oil 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 OMDA Oil will offset losses from the drop in OMDA Oil's long position.The idea behind SNDL Inc and OMDA Oil and 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.| OMDA Oil vs. Epsilon Energy | OMDA Oil vs. Crescent Energy Co | OMDA Oil vs. Evolution Petroleum | OMDA Oil vs. XXL Energy 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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