Correlation Between 1606 Corp and SNDL

Can any of the company-specific risk be diversified away by investing in both 1606 Corp 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 1606 Corp and SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1606 Corp and SNDL Inc, you can compare the effects of market volatilities on 1606 Corp 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 1606 Corp with a short position of SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1606 Corp and SNDL.

Diversification Opportunities for 1606 Corp and SNDL

0.09

Correlation Coefficient

1606 Corp  SNDL

Significant diversification

The 3 months correlation between 1606 and SNDL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding 1606 Corp and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and 1606 Corp 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 1606 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 1606 Corp i.e., 1606 Corp and SNDL go up and down completely randomly.

Pair Corralation between 1606 Corp and SNDL

Given the investment horizon of 90 days 1606 Corp is expected to under-perform the SNDL. In addition to that, 1606 Corp is 4.4 times more volatile than SNDL Inc. It trades about -0.07 of its total potential returns per unit of risk. SNDL Inc is currently generating about 0.01 per unit of volatility. If you would invest  197.00  in SNDL Inc on September 3, 2024 and sell it today you would lose (4.00) from holding SNDL Inc or give up 2.03% of portfolio value over 90 days.

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

1606 Corp  vs.  SNDL Inc

1606 Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1606 Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated 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 1606 Corp and SNDL

The main advantage of trading using opposite 1606 Corp and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1606 Corp 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 1606 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.