Correlation Between Vulcan Materials and SNDL

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

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

Diversification Opportunities for Vulcan Materials and SNDL

0.01

Correlation Coefficient

Vulcan Materials  SNDL

Significant diversification

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

Pair Corralation between Vulcan Materials and SNDL

Considering the 90-day investment horizon Vulcan Materials is expected to generate 0.52 times more return on investment than SNDL. However, Vulcan Materials is 1.93 times less risky than SNDL. It trades about 0.07 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.04 per unit of risk. If you would invest  24,944  in Vulcan Materials on October 24, 2024 and sell it today you would earn a total of  2,066  from holding Vulcan Materials or generate 8.28% return on investment over 90 days.

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

Vulcan Materials  vs.  SNDL Inc

Vulcan Materials

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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

Pair Trading with Vulcan Materials and SNDL

The main advantage of trading using opposite Vulcan Materials and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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 Vulcan Materials 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.