Correlation Between Community and SNDL

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

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

Diversification Opportunities for Community and SNDL

0.31

Correlation Coefficient

Community  SNDL

Weak diversification

The 3 months correlation between Community and SNDL is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Community Health Systems and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Community 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 Community Health Systems 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 Community i.e., Community and SNDL go up and down completely randomly.

Pair Corralation between Community and SNDL

Assuming the 90 days trading horizon Community Health Systems is expected to generate 0.26 times more return on investment than SNDL. However, Community Health Systems is 3.8 times less risky than SNDL. It trades about -0.13 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.05 per unit of risk. If you would invest  10,043  in Community Health Systems on September 13, 2024 and sell it today you would lose (618.00) from holding Community Health Systems or give up 6.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Community Health Systems  vs.  SNDL Inc

Community Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Community Health Systems 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 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.

Pair Trading with Community and SNDL

The main advantage of trading using opposite Community and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community 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 Community Health Systems 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.