Correlation Between Rave Restaurant and SNDL

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

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

Diversification Opportunities for Rave Restaurant and SNDL

-0.22

Correlation Coefficient

Rave Restaurant  SNDL

Very good diversification

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

Pair Corralation between Rave Restaurant and SNDL

Given the investment horizon of 90 days Rave Restaurant Group is expected to generate 1.57 times more return on investment than SNDL. However, Rave Restaurant is 1.57 times more volatile than SNDL Inc. It trades about 0.0 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.29 per unit of risk. If you would invest  272.00  in Rave Restaurant Group on September 19, 2024 and sell it today you would lose (2.00) from holding Rave Restaurant Group or give up 0.74% of portfolio value over 90 days.

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

Rave Restaurant Group  vs.  SNDL Inc

Rave Restaurant Group

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Rave Restaurant exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Rave Restaurant and SNDL

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

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.