Correlation Between SNDL and TELEFONICA

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

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

Diversification Opportunities for SNDL and TELEFONICA

0.27

Correlation Coefficient

SNDL  TELEFONICA

Modest diversification

The 3 months correlation between SNDL and TELEFONICA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and TELEFONICA EUROPE B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELEFONICA EUROPE 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 TELEFONICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELEFONICA EUROPE has no effect on the direction of SNDL i.e., SNDL and TELEFONICA go up and down completely randomly.

Pair Corralation between SNDL and TELEFONICA

Given the investment horizon of 90 days SNDL Inc is expected to under-perform the TELEFONICA. In addition to that, SNDL is 6.82 times more volatile than TELEFONICA EUROPE B. It trades about -0.09 of its total potential returns per unit of risk. TELEFONICA EUROPE B is currently generating about -0.18 per unit of volatility. If you would invest  11,841  in TELEFONICA EUROPE B on September 14, 2024 and sell it today you would lose (559.00) from holding TELEFONICA EUROPE B or give up 4.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

SNDL Inc  vs.  TELEFONICA EUROPE B

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

TELEFONICA EUROPE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TELEFONICA EUROPE B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TELEFONICA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SNDL and TELEFONICA

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

The idea behind SNDL Inc and TELEFONICA EUROPE B 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.