Correlation Between Cumulus Media and SNDL

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

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

Diversification Opportunities for Cumulus Media and SNDL

0.75

Correlation Coefficient

Cumulus Media  SNDL

Poor diversification

The 3 months correlation between Cumulus and SNDL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Cumulus Media 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 Cumulus Media Class 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 Cumulus Media i.e., Cumulus Media and SNDL go up and down completely randomly.

Pair Corralation between Cumulus Media and SNDL

Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the SNDL. In addition to that, Cumulus Media is 2.5 times more volatile than SNDL Inc. It trades about -0.06 of its total potential returns per unit of risk. SNDL Inc is currently generating about -0.08 per unit of volatility. If you would invest  174.00  in SNDL Inc on December 28, 2024 and sell it today you would lose (25.00) from holding SNDL Inc or give up 14.37% of portfolio value over 90 days.

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

Cumulus Media Class  vs.  SNDL Inc

Cumulus Media Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SNDL Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cumulus Media and SNDL

The main advantage of trading using opposite Cumulus Media and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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 Cumulus Media Class 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.