Correlation Between Global Net and SNDL

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

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

Diversification Opportunities for Global Net and SNDL

0.22

Correlation Coefficient

Global Net  SNDL

Modest diversification

The 3 months correlation between Global and SNDL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and SNDL go up and down completely randomly.

Pair Corralation between Global Net and SNDL

Assuming the 90 days trading horizon Global Net is expected to generate 2.5 times less return on investment than SNDL. But when comparing it to its historical volatility, Global Net Lease is 1.52 times less risky than SNDL. It trades about 0.04 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  189.00  in SNDL Inc on October 10, 2024 and sell it today you would earn a total of  6.00  from holding SNDL Inc or generate 3.17% return on investment over 90 days.

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

Global Net Lease  vs.  SNDL Inc

Global Net Lease

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SNDL Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SNDL Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Global Net and SNDL

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