Correlation Between SNDL and Collective Mining

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

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

Diversification Opportunities for SNDL and Collective Mining

0.41

Correlation Coefficient

SNDL  Collective Mining

Very weak diversification

The 3 months correlation between SNDL and Collective is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Collective Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collective Mining 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 Collective Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collective Mining has no effect on the direction of SNDL i.e., SNDL and Collective Mining go up and down completely randomly.

Pair Corralation between SNDL and Collective Mining

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Collective Mining. In addition to that, SNDL is 1.9 times more volatile than Collective Mining. It trades about -0.12 of its total potential returns per unit of risk. Collective Mining is currently generating about -0.07 per unit of volatility. If you would invest  374.00  in Collective Mining on September 5, 2024 and sell it today you would lose (14.00) from holding Collective Mining or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

SNDL Inc  vs.  Collective Mining

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.

Collective Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Collective Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Collective Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SNDL and Collective Mining

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

The idea behind SNDL Inc and Collective Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.