Correlation Between DOW JONES and SNDL
Can any of the company-specific risk be diversified away by investing in both DOW JONES 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 DOW JONES and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DOW JONES EQUITY and SNDL Inc, you can compare the effects of market volatilities on DOW JONES 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 DOW JONES with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DOW JONES and SNDL.
Diversification Opportunities for DOW JONES and SNDL
Very weak diversification
The 3 months correlation between DOW and SNDL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DOW JONES EQUITY and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and DOW JONES 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 DOW JONES EQUITY 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 DOW JONES i.e., DOW JONES and SNDL go up and down completely randomly.
Pair Corralation between DOW JONES and SNDL
Assuming the 90 days trading horizon DOW JONES EQUITY is expected to under-perform the SNDL. But the index apears to be less risky and, when comparing its historical volatility, DOW JONES EQUITY is 2.09 times less risky than SNDL. The index trades about -0.38 of its potential returns per unit of risk. The SNDL Inc is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 202.00 in SNDL Inc on September 24, 2024 and sell it today you would lose (17.00) from holding SNDL Inc or give up 8.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
DOW JONES EQUITY vs. SNDL Inc
Performance |
Timeline |
DOW JONES and SNDL Volatility Contrast
Predicted Return Density |
Returns |
DOW JONES EQUITY
Pair trading matchups for DOW JONES
SNDL Inc
Pair trading matchups for SNDL
Pair Trading with DOW JONES and SNDL
The main advantage of trading using opposite DOW JONES and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DOW JONES 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.DOW JONES vs. SNDL Inc | DOW JONES vs. BJs Restaurants | DOW JONES vs. Chipotle Mexican Grill | DOW JONES vs. First Watch Restaurant |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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