Correlation Between SNDL and Knife River

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

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

Diversification Opportunities for SNDL and Knife River

-0.39

Correlation Coefficient

SNDL  Knife River

Very good diversification

The 3 months correlation between SNDL and Knife is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of SNDL i.e., SNDL and Knife River go up and down completely randomly.

Pair Corralation between SNDL and Knife River

Given the investment horizon of 90 days SNDL is expected to generate 6.13 times less return on investment than Knife River. In addition to that, SNDL is 1.8 times more volatile than Knife River. It trades about 0.01 of its total potential returns per unit of risk. Knife River is currently generating about 0.13 per unit of volatility. If you would invest  3,551  in Knife River on September 20, 2024 and sell it today you would earn a total of  6,541  from holding Knife River or generate 184.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.39%
Values	Daily Returns

SNDL Inc  vs.  Knife River

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 latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Knife River

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Knife River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SNDL and Knife River

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

The idea behind SNDL Inc and Knife River 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.