Correlation Between Centene and SNDL

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

By analyzing existing cross correlation between Centene 425 percent and SNDL Inc, you can compare the effects of market volatilities on Centene and SNDL 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 Centene with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene and SNDL.

Diversification Opportunities for Centene and SNDL

0.09

Correlation Coefficient

Centene  SNDL

Significant diversification

The 3 months correlation between Centene and SNDL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Centene 425 percent and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Centene 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 Centene 425 percent are associated (or correlated) with SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Centene i.e., Centene and SNDL go up and down completely randomly.

Pair Corralation between Centene and SNDL

Assuming the 90 days trading horizon Centene 425 percent is expected to generate 0.27 times more return on investment than SNDL. However, Centene 425 percent is 3.77 times less risky than SNDL. It trades about -0.1 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.09 per unit of risk. If you would invest  9,648  in Centene 425 percent on December 22, 2024 and sell it today you would lose (443.00) from holding Centene 425 percent or give up 4.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Centene 425 percent  vs.  SNDL Inc

Centene 425 percent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centene 425 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centene is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Centene and SNDL

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

The idea behind Centene 425 percent and SNDL 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.