Correlation Between SNDL and Enersys

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

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

Diversification Opportunities for SNDL and Enersys

0.01

Correlation Coefficient

SNDL  Enersys

Significant diversification

The 3 months correlation between SNDL and Enersys is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of SNDL i.e., SNDL and Enersys go up and down completely randomly.

Pair Corralation between SNDL and Enersys

Given the investment horizon of 90 days SNDL Inc is expected to generate 2.4 times more return on investment than Enersys. However, SNDL is 2.4 times more volatile than Enersys. It trades about 0.04 of its potential returns per unit of risk. Enersys is currently generating about 0.0 per unit of risk. If you would invest  140.00  in SNDL Inc on August 28, 2024 and sell it today you would earn a total of  62.00  from holding SNDL Inc or generate 44.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SNDL Inc  vs.  Enersys

SNDL Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SNDL Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, SNDL may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Enersys

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enersys are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SNDL and Enersys

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

The idea behind SNDL Inc and Enersys 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.