Correlation Between SWK Holdings and SNDL
Can any of the company-specific risk be diversified away by investing in both SWK Holdings and SNDL 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 SWK Holdings and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWK Holdings and SNDL Inc, you can compare the effects of market volatilities on SWK Holdings and SNDL 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 SWK Holdings with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWK Holdings and SNDL.
Diversification Opportunities for SWK Holdings and SNDL
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SWK and SNDL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SWK Holdings and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and SWK Holdings 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 SWK Holdings are associated (or correlated) with SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of SWK Holdings i.e., SWK Holdings and SNDL go up and down completely randomly.
Pair Corralation between SWK Holdings and SNDL
Assuming the 90 days horizon SWK Holdings is expected to generate 0.08 times more return on investment than SNDL. However, SWK Holdings is 12.41 times less risky than SNDL. It trades about 0.06 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.06 per unit of risk. If you would invest 2,541 in SWK Holdings on September 1, 2024 and sell it today you would earn a total of 10.00 from holding SWK Holdings or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWK Holdings vs. SNDL Inc
Performance |
| Timeline |
| SWK Holdings |
| SNDL Inc |
SWK Holdings and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWK Holdings and SNDL
The main advantage of trading using opposite SWK Holdings and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWK Holdings position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| SWK Holdings vs. SNDL Inc | SWK Holdings vs. Willamette Valley Vineyards | SWK Holdings vs. Helmerich and Payne | SWK Holdings vs. Lifevantage |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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