Correlation Between SNDL and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both SNDL and SWK 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 SWK 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 SWK Holdings, you can compare the effects of market volatilities on SNDL and SWK 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and SWK Holdings.
Diversification Opportunities for SNDL and SWK Holdings
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SNDL and SWK is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and SWK Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings has no effect on the direction of SNDL i.e., SNDL and SWK Holdings go up and down completely randomly.
Pair Corralation between SNDL and SWK Holdings
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the SWK Holdings. In addition to that, SNDL is 7.99 times more volatile than SWK Holdings. It trades about -0.01 of its total potential returns per unit of risk. SWK Holdings is currently generating about 0.11 per unit of volatility. If you would invest 2,423 in SWK Holdings on September 3, 2024 and sell it today you would earn a total of 128.00 from holding SWK Holdings or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. SWK Holdings
Performance |
| Timeline |
| SNDL Inc |
| SWK Holdings |
SNDL and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and SWK Holdings
The main advantage of trading using opposite SNDL and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, SWK 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.The idea behind SNDL Inc and SWK 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.| SWK Holdings vs. Truist Financial | SWK Holdings vs. Truist Financial | SWK Holdings vs. Truist Financial | SWK Holdings vs. State Street |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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