Correlation Between SNDL and Suntory Beverage

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

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

Diversification Opportunities for SNDL and Suntory Beverage

0.15

Correlation Coefficient

SNDL  Suntory Beverage

Average diversification

The 3 months correlation between SNDL and Suntory is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of SNDL i.e., SNDL and Suntory Beverage go up and down completely randomly.

Pair Corralation between SNDL and Suntory Beverage

Given the investment horizon of 90 days SNDL Inc is expected to generate 2.17 times more return on investment than Suntory Beverage. However, SNDL is 2.17 times more volatile than Suntory Beverage Food. It trades about -0.05 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about -0.19 per unit of risk. If you would invest  208.00  in SNDL Inc on September 12, 2024 and sell it today you would lose (23.50) from holding SNDL Inc or give up 11.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SNDL Inc  vs.  Suntory Beverage Food

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 latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SNDL and Suntory Beverage

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

The idea behind SNDL Inc and Suntory Beverage Food 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.