Correlation Between Contango ORE and SNDL

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

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

Diversification Opportunities for Contango ORE and SNDL

0.53

Correlation Coefficient

Contango ORE  SNDL

Very weak diversification

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

Pair Corralation between Contango ORE and SNDL

Given the investment horizon of 90 days Contango ORE is expected to generate 1.4 times more return on investment than SNDL. However, Contango ORE is 1.4 times more volatile than SNDL Inc. It trades about 0.02 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.03 per unit of risk. If you would invest  1,024  in Contango ORE on December 19, 2024 and sell it today you would earn a total of  14.00  from holding Contango ORE or generate 1.37% return on investment over 90 days.

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

Contango ORE  vs.  SNDL Inc

Contango ORE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Contango ORE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Contango ORE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the 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 quite persistent fundamental indicators, SNDL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Contango ORE and SNDL

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

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.