Correlation Between Topbuild Corp and SNDL

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

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

Diversification Opportunities for Topbuild Corp and SNDL

0.53

Correlation Coefficient

Topbuild Corp  SNDL

Very weak diversification

The 3 months correlation between Topbuild and SNDL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Topbuild Corp 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 Topbuild 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 Topbuild Corp i.e., Topbuild Corp and SNDL go up and down completely randomly.

Pair Corralation between Topbuild Corp and SNDL

Considering the 90-day investment horizon Topbuild Corp is expected to under-perform the SNDL. But the stock apears to be less risky and, when comparing its historical volatility, Topbuild Corp is 1.33 times less risky than SNDL. The stock trades about -0.07 of its potential returns per unit of risk. The SNDL Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  201.00  in SNDL Inc on October 21, 2024 and sell it today you would lose (23.00) from holding SNDL Inc or give up 11.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Topbuild Corp  vs.  SNDL Inc

Topbuild Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Topbuild Corp and SNDL

The main advantage of trading using opposite Topbuild Corp and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild Corp 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 Topbuild 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.