Correlation Between SNDL and AG Mortgage

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

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

Diversification Opportunities for SNDL and AG Mortgage

-0.53

Correlation Coefficient

SNDL  AG Mortgage

Excellent diversification

The 3 months correlation between SNDL and MITP is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and AG Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AG Mortgage Investment 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 AG Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AG Mortgage Investment has no effect on the direction of SNDL i.e., SNDL and AG Mortgage go up and down completely randomly.

Pair Corralation between SNDL and AG Mortgage

Given the investment horizon of 90 days SNDL Inc is expected to generate 14.06 times more return on investment than AG Mortgage. However, SNDL is 14.06 times more volatile than AG Mortgage Investment. It trades about 0.01 of its potential returns per unit of risk. AG Mortgage Investment is currently generating about 0.14 per unit of risk. If you would invest  222.00  in SNDL Inc on October 10, 2024 and sell it today you would lose (27.00) from holding SNDL Inc or give up 12.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.32%
Values	Daily Returns

SNDL Inc  vs.  AG Mortgage Investment

SNDL Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SNDL Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

AG Mortgage Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AG Mortgage Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AG Mortgage is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SNDL and AG Mortgage

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

The idea behind SNDL Inc and AG Mortgage Investment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.