Correlation Between SNDL and Four Seasons

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

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

Diversification Opportunities for SNDL and Four Seasons

0.1

Correlation Coefficient

SNDL  Four Seasons

Average diversification

The 3 months correlation between SNDL and Four is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of SNDL i.e., SNDL and Four Seasons go up and down completely randomly.

Pair Corralation between SNDL and Four Seasons

Given the investment horizon of 90 days SNDL is expected to generate 41.75 times less return on investment than Four Seasons. But when comparing it to its historical volatility, SNDL Inc is 12.09 times less risky than Four Seasons. It trades about 0.02 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  558.00  in Four Seasons Education on September 14, 2024 and sell it today you would earn a total of  572.00  from holding Four Seasons Education or generate 102.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.2%
Values	Daily Returns

SNDL Inc  vs.  Four Seasons Education

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 unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Four Seasons Education

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Four Seasons Education are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Four Seasons unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNDL and Four Seasons

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

The idea behind SNDL Inc and Four Seasons Education 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.