Correlation Between SNDL and Fevertree Drinks

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

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

Diversification Opportunities for SNDL and Fevertree Drinks

0.0

Correlation Coefficient

SNDL  Fevertree Drinks

Pay attention - limited upside

The 3 months correlation between SNDL and Fevertree is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of SNDL i.e., SNDL and Fevertree Drinks go up and down completely randomly.

Pair Corralation between SNDL and Fevertree Drinks

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Fevertree Drinks. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.42 times less risky than Fevertree Drinks. The stock trades about -0.1 of its potential returns per unit of risk. The Fevertree Drinks Plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  892.00  in Fevertree Drinks Plc on December 1, 2024 and sell it today you would lose (42.00) from holding Fevertree Drinks Plc or give up 4.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

SNDL Inc  vs.  Fevertree Drinks Plc

SNDL Inc

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Fevertree Drinks Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fevertree Drinks is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SNDL and Fevertree Drinks

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

The idea behind SNDL Inc and Fevertree Drinks Plc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.