Correlation Between SNDL and Freedom Bank

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

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

Diversification Opportunities for SNDL and Freedom Bank

-0.17

Correlation Coefficient

SNDL  Freedom Bank

Good diversification

The 3 months correlation between SNDL and Freedom is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of SNDL i.e., SNDL and Freedom Bank go up and down completely randomly.

Pair Corralation between SNDL and Freedom Bank

Given the investment horizon of 90 days SNDL Inc is expected to generate 3.34 times more return on investment than Freedom Bank. However, SNDL is 3.34 times more volatile than Freedom Bank of. It trades about 0.01 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.06 per unit of risk. If you would invest  235.00  in SNDL Inc on October 12, 2024 and sell it today you would lose (51.00) from holding SNDL Inc or give up 21.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.02%
Values	Daily Returns

SNDL Inc  vs.  Freedom Bank of

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.

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SNDL and Freedom Bank

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

The idea behind SNDL Inc and Freedom Bank of 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.