Correlation Between Sweetgreen and SNDL

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

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

Diversification Opportunities for Sweetgreen and SNDL

0.41

Correlation Coefficient

Sweetgreen  SNDL

Very weak diversification

The 3 months correlation between Sweetgreen and SNDL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sweetgreen and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Sweetgreen 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 Sweetgreen 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 Sweetgreen i.e., Sweetgreen and SNDL go up and down completely randomly.

Pair Corralation between Sweetgreen and SNDL

Allowing for the 90-day total investment horizon Sweetgreen is expected to generate 1.15 times more return on investment than SNDL. However, Sweetgreen is 1.15 times more volatile than SNDL Inc. It trades about 0.07 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.01 per unit of risk. If you would invest  973.00  in Sweetgreen on October 13, 2024 and sell it today you would earn a total of  2,337  from holding Sweetgreen or generate 240.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sweetgreen  vs.  SNDL Inc

Sweetgreen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sweetgreen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Sweetgreen and SNDL

The main advantage of trading using opposite Sweetgreen and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweetgreen 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 Sweetgreen 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.