Correlation Between Precision Drilling and SNDL

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

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

Diversification Opportunities for Precision Drilling and SNDL

0.1

Correlation Coefficient

Precision Drilling  SNDL

Average diversification

The 3 months correlation between Precision and SNDL is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and SNDL go up and down completely randomly.

Pair Corralation between Precision Drilling and SNDL

Considering the 90-day investment horizon Precision Drilling is expected to generate 0.74 times more return on investment than SNDL. However, Precision Drilling is 1.36 times less risky than SNDL. It trades about 0.3 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.07 per unit of risk. If you would invest  5,846  in Precision Drilling on October 18, 2024 and sell it today you would earn a total of  735.00  from holding Precision Drilling or generate 12.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Precision Drilling  vs.  SNDL Inc

Precision Drilling

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Precision Drilling may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Precision Drilling and SNDL

The main advantage of trading using opposite Precision Drilling and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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 Precision Drilling 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.