Correlation Between SNDL and WK Kellogg

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

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

Diversification Opportunities for SNDL and WK Kellogg

-0.42

Correlation Coefficient

SNDL  WK Kellogg

Very good diversification

The 3 months correlation between SNDL and KLG is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg 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 WK Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WK Kellogg has no effect on the direction of SNDL i.e., SNDL and WK Kellogg go up and down completely randomly.

Pair Corralation between SNDL and WK Kellogg

Given the investment horizon of 90 days SNDL is expected to generate 1.64 times less return on investment than WK Kellogg. In addition to that, SNDL is 1.35 times more volatile than WK Kellogg Co. It trades about 0.01 of its total potential returns per unit of risk. WK Kellogg Co is currently generating about 0.02 per unit of volatility. If you would invest  1,616  in WK Kellogg Co on October 9, 2024 and sell it today you would earn a total of  143.00  from holding WK Kellogg Co or generate 8.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.85%
Values	Daily Returns

SNDL Inc  vs.  WK Kellogg Co

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.

WK Kellogg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, WK Kellogg 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 WK Kellogg

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

The idea behind SNDL Inc and WK Kellogg Co 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 CEOs Directory module to screen CEOs from public companies around the world.