Correlation Between Vodka Brands and SNDL

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

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

Diversification Opportunities for Vodka Brands and SNDL

-0.65

Correlation Coefficient

Vodka Brands  SNDL

Excellent diversification

The 3 months correlation between Vodka and SNDL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vodka Brands Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Vodka Brands 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 Vodka Brands Corp 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 Vodka Brands i.e., Vodka Brands and SNDL go up and down completely randomly.

Pair Corralation between Vodka Brands and SNDL

Given the investment horizon of 90 days Vodka Brands Corp is expected to under-perform the SNDL. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vodka Brands Corp is 3.04 times less risky than SNDL. The pink sheet trades about -0.22 of its potential returns per unit of risk. The SNDL Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  189.00  in SNDL Inc on October 10, 2024 and sell it today you would earn a total of  6.00  from holding SNDL Inc or generate 3.17% return on investment over 90 days.

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

Vodka Brands Corp  vs.  SNDL Inc

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands 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

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SNDL Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Vodka Brands and SNDL

The main advantage of trading using opposite Vodka Brands and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodka Brands 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 Vodka Brands Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.