Correlation Between Bright Green and SNDL

Can any of the company-specific risk be diversified away by investing in both Bright Green 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 Bright Green and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Green Corp and SNDL Inc, you can compare the effects of market volatilities on Bright Green 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 Bright Green with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Green and SNDL.

Diversification Opportunities for Bright Green and SNDL

0.52

Correlation Coefficient

Bright Green  SNDL

Very weak diversification

The 3 months correlation between Bright and SNDL is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bright Green Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Bright Green 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 Bright Green Corp 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 Bright Green i.e., Bright Green and SNDL go up and down completely randomly.

Pair Corralation between Bright Green and SNDL

Given the investment horizon of 90 days Bright Green Corp is expected to under-perform the SNDL. In addition to that, Bright Green is 3.87 times more volatile than SNDL Inc. It trades about -0.15 of its total potential returns per unit of risk. SNDL Inc is currently generating about 0.0 per unit of volatility. If you would invest  192.00  in SNDL Inc on September 29, 2024 and sell it today you would lose (13.00) from holding SNDL Inc or give up 6.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	50.0%
Values	Daily Returns

Bright Green Corp  vs.  SNDL Inc

Bright Green Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Green Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bright Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bright Green and SNDL

The main advantage of trading using opposite Bright Green and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Green 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.

The idea behind Bright Green Corp and SNDL Inc 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.