Correlation Between NESNVX and SNDL

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

By analyzing existing cross correlation between NESNVX 1 15 SEP 27 and SNDL Inc, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and SNDL.

Diversification Opportunities for NESNVX and SNDL

0.23

Correlation Coefficient

NESNVX  SNDL

Modest diversification

The 3 months correlation between NESNVX and SNDL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 1 15 SEP 27 and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and NESNVX 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 NESNVX 1 15 SEP 27 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 NESNVX i.e., NESNVX and SNDL go up and down completely randomly.

Pair Corralation between NESNVX and SNDL

Assuming the 90 days trading horizon NESNVX 1 15 SEP 27 is expected to under-perform the SNDL. But the bond apears to be less risky and, when comparing its historical volatility, NESNVX 1 15 SEP 27 is 3.84 times less risky than SNDL. The bond trades about -0.14 of its potential returns per unit of risk. The SNDL Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  197.00  in SNDL Inc on October 15, 2024 and sell it today you would lose (17.00) from holding SNDL Inc or give up 8.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.68%
Values	Daily Returns

NESNVX 1 15 SEP 27  vs.  SNDL Inc

NESNVX 1 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 1 15 SEP 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 NESNVX 1 15 SEP 27 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 NESNVX and SNDL

The main advantage of trading using opposite NESNVX and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 1 15 SEP 27 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.