Correlation Between MASTERCARD and SNDL

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

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

Diversification Opportunities for MASTERCARD and SNDL

0.01

Correlation Coefficient

MASTERCARD  SNDL

Significant diversification

The 3 months correlation between MASTERCARD and SNDL is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding MASTERCARD INC and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and MASTERCARD 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 MASTERCARD INC 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 MASTERCARD i.e., MASTERCARD and SNDL go up and down completely randomly.

Pair Corralation between MASTERCARD and SNDL

Assuming the 90 days trading horizon MASTERCARD INC is expected to generate 0.34 times more return on investment than SNDL. However, MASTERCARD INC is 2.93 times less risky than SNDL. It trades about -0.06 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.12 per unit of risk. If you would invest  7,837  in MASTERCARD INC on September 5, 2024 and sell it today you would lose (121.00) from holding MASTERCARD INC or give up 1.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.95%
Values	Daily Returns

MASTERCARD INC  vs.  SNDL Inc

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 latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MASTERCARD INC investors.

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.

Pair Trading with MASTERCARD and SNDL

The main advantage of trading using opposite MASTERCARD and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MASTERCARD 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 MASTERCARD INC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.