Correlation Between SNDL and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both SNDL and Xponential Fitness 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 Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Xponential Fitness, you can compare the effects of market volatilities on SNDL and Xponential Fitness 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 Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Xponential Fitness.
Diversification Opportunities for SNDL and Xponential Fitness
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between SNDL and Xponential is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of SNDL i.e., SNDL and Xponential Fitness go up and down completely randomly.
Pair Corralation between SNDL and Xponential Fitness
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Xponential Fitness. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.68 times less risky than Xponential Fitness. The stock trades about -0.08 of its potential returns per unit of risk. The Xponential Fitness is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,249 in Xponential Fitness on August 28, 2024 and sell it today you would earn a total of 321.00 from holding Xponential Fitness or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Xponential Fitness
Performance |
| Timeline |
| SNDL Inc |
| Xponential Fitness |
SNDL and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Xponential Fitness
The main advantage of trading using opposite SNDL and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.The idea behind SNDL Inc and Xponential Fitness 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.| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. Bowlero Corp | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Acushnet Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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