Correlation Between SNDL and Precision Drilling

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

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

Diversification Opportunities for SNDL and Precision Drilling

0.13

Correlation Coefficient

SNDL  Precision Drilling

Average diversification

The 3 months correlation between SNDL and Precision is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of SNDL i.e., SNDL and Precision Drilling go up and down completely randomly.

Pair Corralation between SNDL and Precision Drilling

Given the investment horizon of 90 days SNDL Inc is expected to generate 1.6 times more return on investment than Precision Drilling. However, SNDL is 1.6 times more volatile than Precision Drilling. It trades about 0.01 of its potential returns per unit of risk. Precision Drilling is currently generating about -0.01 per unit of risk. If you would invest  230.00  in SNDL Inc on October 3, 2024 and sell it today you would lose (51.00) from holding SNDL Inc or give up 22.17% of portfolio value over 90 days.

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

SNDL Inc  vs.  Precision Drilling

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.

Precision Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precision Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SNDL and Precision Drilling

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

The idea behind SNDL Inc and Precision Drilling 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.