Correlation Between International Paper and SNDL

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

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

Diversification Opportunities for International Paper and SNDL

-0.68

Correlation Coefficient

International Paper  SNDL

Excellent diversification

The 3 months correlation between International and SNDL is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding International Paper and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and International Paper 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 International Paper 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 International Paper i.e., International Paper and SNDL go up and down completely randomly.

Pair Corralation between International Paper and SNDL

Assuming the 90 days horizon International Paper is expected to generate 4.77 times less return on investment than SNDL. But when comparing it to its historical volatility, International Paper is 1.46 times less risky than SNDL. It trades about 0.01 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  148.00  in SNDL Inc on October 5, 2024 and sell it today you would earn a total of  45.00  from holding SNDL Inc or generate 30.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	51.43%
Values	Daily Returns

International Paper  vs.  SNDL Inc

International Paper

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days International Paper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, International Paper is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail 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 International Paper and SNDL

The main advantage of trading using opposite International Paper and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Paper 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 International Paper 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.