Correlation Between SNDL and XBP Europe

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

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

Diversification Opportunities for SNDL and XBP Europe

-0.69

Correlation Coefficient

SNDL  XBP Europe

Excellent diversification

The 3 months correlation between SNDL and XBP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of SNDL i.e., SNDL and XBP Europe go up and down completely randomly.

Pair Corralation between SNDL and XBP Europe

Given the investment horizon of 90 days SNDL Inc is expected to generate 0.37 times more return on investment than XBP Europe. However, SNDL Inc is 2.69 times less risky than XBP Europe. It trades about 0.03 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about -0.15 per unit of risk. If you would invest  186.00  in SNDL Inc on October 11, 2024 and sell it today you would earn a total of  2.00  from holding SNDL Inc or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.0%
Values	Daily Returns

SNDL Inc  vs.  XBP Europe Holdings

SNDL Inc

Risk-Adjusted Performance

0 of 100

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.

XBP Europe Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, XBP Europe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SNDL and XBP Europe

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

The idea behind SNDL Inc and XBP Europe Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.