Correlation Between AG Mortgage and SNDL

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

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

Diversification Opportunities for AG Mortgage and SNDL

-0.48

Correlation Coefficient

AG Mortgage  SNDL

Very good diversification

The 3 months correlation between MITP and SNDL is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding AG Mortgage Investment and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and AG Mortgage 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 AG Mortgage Investment 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 AG Mortgage i.e., AG Mortgage and SNDL go up and down completely randomly.

Pair Corralation between AG Mortgage and SNDL

Given the investment horizon of 90 days AG Mortgage is expected to generate 4.26 times less return on investment than SNDL. But when comparing it to its historical volatility, AG Mortgage Investment is 14.65 times less risky than SNDL. It trades about 0.15 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  149.00  in SNDL Inc on October 10, 2024 and sell it today you would earn a total of  39.00  from holding SNDL Inc or generate 26.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.92%
Values	Daily Returns

AG Mortgage Investment  vs.  SNDL Inc

AG Mortgage Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AG Mortgage is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SNDL Inc

Risk-Adjusted Performance

1 of 100

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 AG Mortgage and SNDL

The main advantage of trading using opposite AG Mortgage and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AG Mortgage 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 AG Mortgage Investment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.