Correlation Between SNDL and Waste Management

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

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

Diversification Opportunities for SNDL and Waste Management

-0.03

Correlation Coefficient

SNDL  Waste Management

Good diversification

The 3 months correlation between SNDL and Waste is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of SNDL i.e., SNDL and Waste Management go up and down completely randomly.

Pair Corralation between SNDL and Waste Management

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Waste Management. In addition to that, SNDL is 2.34 times more volatile than Waste Management. It trades about -0.03 of its total potential returns per unit of risk. Waste Management is currently generating about 0.0 per unit of volatility. If you would invest  20,849  in Waste Management on September 28, 2024 and sell it today you would lose (347.00) from holding Waste Management or give up 1.66% of portfolio value over 90 days.

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

SNDL Inc  vs.  Waste Management

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.

Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Waste Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SNDL and Waste Management

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

The idea behind SNDL Inc and Waste Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.