Correlation Between SNDL and 02005NBM1

Can any of the company-specific risk be diversified away by investing in both SNDL and 02005NBM1 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 02005NBM1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SNDL Inc and ALLY 47, you can compare the effects of market volatilities on SNDL and 02005NBM1 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 02005NBM1. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and 02005NBM1.

Diversification Opportunities for SNDL and 02005NBM1

0.6

Correlation Coefficient

SNDL  02005NBM1

Poor diversification

The 3 months correlation between SNDL and 02005NBM1 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and ALLY 47 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 02005NBM1 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 02005NBM1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 02005NBM1 has no effect on the direction of SNDL i.e., SNDL and 02005NBM1 go up and down completely randomly.

Pair Corralation between SNDL and 02005NBM1

Given the investment horizon of 90 days SNDL Inc is expected to generate 0.94 times more return on investment than 02005NBM1. However, SNDL Inc is 1.07 times less risky than 02005NBM1. It trades about -0.07 of its potential returns per unit of risk. ALLY 47 is currently generating about -0.12 per unit of risk. If you would invest  182.00  in SNDL Inc on December 24, 2024 and sell it today you would lose (23.10) from holding SNDL Inc or give up 12.69% of portfolio value over 90 days.

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

SNDL Inc  vs.  ALLY 47

SNDL Inc

Risk-Adjusted Performance

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.

02005NBM1

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALLY 47 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for ALLY 47 investors.

Pair Trading with SNDL and 02005NBM1

The main advantage of trading using opposite SNDL and 02005NBM1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, 02005NBM1 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 02005NBM1 will offset losses from the drop in 02005NBM1's long position.

The idea behind SNDL Inc and ALLY 47 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 Anywhere module to track or share privately all of your investments from the convenience of any device.