Correlation Between SNDL and NORTHERN

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

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

Diversification Opportunities for SNDL and NORTHERN

0.29

Correlation Coefficient

SNDL  NORTHERN

Modest diversification

The 3 months correlation between SNDL and NORTHERN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and NORTHERN TRUST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHERN TRUST PORATION 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 NORTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHERN TRUST PORATION has no effect on the direction of SNDL i.e., SNDL and NORTHERN go up and down completely randomly.

Pair Corralation between SNDL and NORTHERN

Given the investment horizon of 90 days SNDL Inc is expected to generate 7.26 times more return on investment than NORTHERN. However, SNDL is 7.26 times more volatile than NORTHERN TRUST PORATION. It trades about 0.01 of its potential returns per unit of risk. NORTHERN TRUST PORATION is currently generating about 0.01 per unit of risk. If you would invest  229.00  in SNDL Inc on October 9, 2024 and sell it today you would lose (40.00) from holding SNDL Inc or give up 17.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

SNDL Inc  vs.  NORTHERN TRUST PORATION

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.

NORTHERN TRUST PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORTHERN TRUST PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NORTHERN 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 NORTHERN

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

The idea behind SNDL Inc and NORTHERN TRUST PORATION 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.