Correlation Between SNDL and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both SNDL and MGP Ingredients 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 MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and MGP Ingredients, you can compare the effects of market volatilities on SNDL and MGP Ingredients 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 MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and MGP Ingredients.
Diversification Opportunities for SNDL and MGP Ingredients
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between SNDL and MGP is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of SNDL i.e., SNDL and MGP Ingredients go up and down completely randomly.
Pair Corralation between SNDL and MGP Ingredients
Given the investment horizon of 90 days SNDL is expected to generate 1.02 times less return on investment than MGP Ingredients. In addition to that, SNDL is 1.29 times more volatile than MGP Ingredients. It trades about 0.05 of its total potential returns per unit of risk. MGP Ingredients is currently generating about 0.07 per unit of volatility. If you would invest 2,886 in MGP Ingredients on April 24, 2025 and sell it today you would earn a total of 275.00 from holding MGP Ingredients or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. MGP Ingredients
Performance |
| Timeline |
| SNDL Inc |
| MGP Ingredients |
SNDL and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and MGP Ingredients
The main advantage of trading using opposite SNDL and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.The idea behind SNDL Inc and MGP Ingredients 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.| MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Diageo PLC ADR | MGP Ingredients vs. Pernod Ricard SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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