Correlation Between SNDL and OrganiGram Holdings

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

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

Diversification Opportunities for SNDL and OrganiGram Holdings

0.72

Correlation Coefficient

SNDL  OrganiGram Holdings

Poor diversification

The 3 months correlation between SNDL and OrganiGram is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings 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 OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of SNDL i.e., SNDL and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between SNDL and OrganiGram Holdings

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the OrganiGram Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.66 times less risky than OrganiGram Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The OrganiGram Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  152.00  in OrganiGram Holdings on October 1, 2024 and sell it today you would earn a total of  9.00  from holding OrganiGram Holdings or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SNDL Inc  vs.  OrganiGram Holdings

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.

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, OrganiGram Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SNDL and OrganiGram Holdings

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

The idea behind SNDL Inc and OrganiGram Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.