Correlation Between Grocery Outlet and SNDL

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

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

Diversification Opportunities for Grocery Outlet and SNDL

-0.21

Correlation Coefficient

Grocery Outlet  SNDL

Very good diversification

The 3 months correlation between Grocery and SNDL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and SNDL go up and down completely randomly.

Pair Corralation between Grocery Outlet and SNDL

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.03 times more return on investment than SNDL. However, Grocery Outlet is 1.03 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  1,977  in Grocery Outlet Holding on October 9, 2024 and sell it today you would lose (346.00) from holding Grocery Outlet Holding or give up 17.5% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  SNDL Inc

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, 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 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 Grocery Outlet and SNDL

The main advantage of trading using opposite Grocery Outlet and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.