Correlation Between SNDL and Cheniere Energy

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Can any of the company-specific risk be diversified away by investing in both SNDL and Cheniere Energy 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 SNDL and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Cheniere Energy Partners, you can compare the effects of market volatilities on SNDL and Cheniere Energy 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 SNDL with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Cheniere Energy.

Diversification Opportunities for SNDL and Cheniere Energy

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between SNDL and Cheniere is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and SNDL 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 SNDL Inc are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of SNDL i.e., SNDL and Cheniere Energy go up and down completely randomly.

Pair Corralation between SNDL and Cheniere Energy

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Cheniere Energy. In addition to that, SNDL is 2.43 times more volatile than Cheniere Energy Partners. It trades about -0.01 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.27 per unit of volatility. If you would invest  4,674  in Cheniere Energy Partners on September 5, 2024 and sell it today you would earn a total of  1,129  from holding Cheniere Energy Partners or generate 24.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SNDL Inc  vs.  Cheniere Energy Partners

 Performance 
       Timeline  
SNDL Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Cheniere Energy Partners 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

SNDL and Cheniere Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SNDL and Cheniere Energy

The main advantage of trading using opposite SNDL and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.
The idea behind SNDL Inc and Cheniere Energy Partners 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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