Correlation Between Oatly Group and SNDL

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

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

Diversification Opportunities for Oatly Group and SNDL

0.24

Correlation Coefficient

Oatly Group  SNDL

Modest diversification

The 3 months correlation between Oatly and SNDL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Oatly Group 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 Oatly Group AB 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 Oatly Group i.e., Oatly Group and SNDL go up and down completely randomly.

Pair Corralation between Oatly Group and SNDL

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the SNDL. In addition to that, Oatly Group is 1.35 times more volatile than SNDL Inc. It trades about -0.13 of its total potential returns per unit of risk. SNDL Inc is currently generating about -0.03 per unit of volatility. If you would invest  213.00  in SNDL Inc on August 20, 2024 and sell it today you would lose (18.00) from holding SNDL Inc or give up 8.45% of portfolio value over 90 days.

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

Oatly Group AB  vs.  SNDL Inc

Oatly Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company 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 quite persistent fundamental indicators, SNDL is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Oatly Group and SNDL

The main advantage of trading using opposite Oatly Group and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oatly Group 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 Oatly Group AB 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.

Check out your portfolio center.

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.