Correlation Between SNDL and Clover Health

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

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

Diversification Opportunities for SNDL and Clover Health

0.23

Correlation Coefficient

SNDL  Clover Health

Modest diversification

The 3 months correlation between SNDL and Clover is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Clover Health Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Health Investments and SNDL 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 SNDL Inc are associated (or correlated) with Clover Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Health Investments has no effect on the direction of SNDL i.e., SNDL and Clover Health go up and down completely randomly.

Pair Corralation between SNDL and Clover Health

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Clover Health. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.71 times less risky than Clover Health. The stock trades about 0.0 of its potential returns per unit of risk. The Clover Health Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  287.00  in Clover Health Investments on September 4, 2024 and sell it today you would earn a total of  56.00  from holding Clover Health Investments or generate 19.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SNDL Inc  vs.  Clover Health Investments

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.

Clover Health Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clover Health Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Clover Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNDL and Clover Health

The main advantage of trading using opposite SNDL and Clover Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Clover Health 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 Clover Health will offset losses from the drop in Clover Health's long position.

The idea behind SNDL Inc and Clover Health Investments 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.