Correlation Between SNDL and MASTERCARD

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

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

Diversification Opportunities for SNDL and MASTERCARD

-0.02

Correlation Coefficient

SNDL  MASTERCARD

Good diversification

The 3 months correlation between SNDL and MASTERCARD is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and MASTERCARD INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MASTERCARD INC 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 MASTERCARD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MASTERCARD INC has no effect on the direction of SNDL i.e., SNDL and MASTERCARD go up and down completely randomly.

Pair Corralation between SNDL and MASTERCARD

Given the investment horizon of 90 days SNDL Inc is expected to generate 3.01 times more return on investment than MASTERCARD. However, SNDL is 3.01 times more volatile than MASTERCARD INC. It trades about 0.0 of its potential returns per unit of risk. MASTERCARD INC is currently generating about -0.1 per unit of risk. If you would invest  202.00  in SNDL Inc on September 4, 2024 and sell it today you would lose (8.00) from holding SNDL Inc or give up 3.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

SNDL Inc  vs.  MASTERCARD INC

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 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.

MASTERCARD INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASTERCARD INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MASTERCARD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SNDL and MASTERCARD

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

The idea behind SNDL Inc and MASTERCARD INC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.