Correlation Between SNDL and United Homes
Can any of the company-specific risk be diversified away by investing in both SNDL and United Homes 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 United Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and United Homes Group, you can compare the effects of market volatilities on SNDL and United Homes 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 United Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and United Homes.
Diversification Opportunities for SNDL and United Homes
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SNDL and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes Group 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of SNDL i.e., SNDL and United Homes go up and down completely randomly.
Pair Corralation between SNDL and United Homes
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the United Homes. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.04 times less risky than United Homes. The stock trades about -0.08 of its potential returns per unit of risk. The United Homes Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 559.00 in United Homes Group on August 31, 2024 and sell it today you would earn a total of 53.00 from holding United Homes Group or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. United Homes Group
Performance |
| Timeline |
| SNDL Inc |
| United Homes Group |
SNDL and United Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and United Homes
The main advantage of trading using opposite SNDL and United Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, United Homes 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 United Homes will offset losses from the drop in United Homes' long position.The idea behind SNDL Inc and United Homes Group 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.| United Homes vs. Century Communities | United Homes vs. Dream Finders Homes | United Homes vs. DR Horton | United Homes vs. Everus Construction Group |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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