Correlation Between SNDL and NI Holdings

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

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

Diversification Opportunities for SNDL and NI Holdings

-0.41

Correlation Coefficient

SNDL  NI Holdings

Very good diversification

The 3 months correlation between SNDL and NODK is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of SNDL i.e., SNDL and NI Holdings go up and down completely randomly.

Pair Corralation between SNDL and NI Holdings

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the NI Holdings. In addition to that, SNDL is 1.32 times more volatile than NI Holdings. It trades about -0.17 of its total potential returns per unit of risk. NI Holdings is currently generating about -0.12 per unit of volatility. If you would invest  1,617  in NI Holdings on September 24, 2024 and sell it today you would lose (76.00) from holding NI Holdings or give up 4.7% of portfolio value over 90 days.

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

SNDL Inc  vs.  NI Holdings

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.

NI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SNDL and NI Holdings

The main advantage of trading using opposite SNDL and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, NI Holdings 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 NI Holdings will offset losses from the drop in NI Holdings' long position.

The idea behind SNDL Inc and NI Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.