Correlation Between Compania Cervecerias and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Compania Cervecerias and Sonida Senior 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 Compania Cervecerias and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Cervecerias Unidas and Sonida Senior Living, you can compare the effects of market volatilities on Compania Cervecerias and Sonida Senior 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 Compania Cervecerias with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Cervecerias and Sonida Senior.
Diversification Opportunities for Compania Cervecerias and Sonida Senior
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compania and Sonida is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Compania Cervecerias Unidas and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living and Compania Cervecerias 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 Compania Cervecerias Unidas are associated (or correlated) with Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Compania Cervecerias i.e., Compania Cervecerias and Sonida Senior go up and down completely randomly.
Pair Corralation between Compania Cervecerias and Sonida Senior
Considering the 90-day investment horizon Compania Cervecerias is expected to generate 12.22 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, Compania Cervecerias Unidas is 3.0 times less risky than Sonida Senior. It trades about 0.02 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 905.00 in Sonida Senior Living on September 19, 2024 and sell it today you would earn a total of 1,417 from holding Sonida Senior Living or generate 156.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Cervecerias Unidas vs. Sonida Senior Living
Performance |
| Timeline |
| Compania Cervecerias |
| Sonida Senior Living |
Compania Cervecerias and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Cervecerias and Sonida Senior
The main advantage of trading using opposite Compania Cervecerias and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Cervecerias position performs unexpectedly, Sonida Senior 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 Sonida Senior will offset losses from the drop in Sonida Senior's long position.| Compania Cervecerias vs. Fomento Economico Mexicano | Compania Cervecerias vs. Carlsberg AS | Compania Cervecerias vs. Anheuser Busch Inbev | Compania Cervecerias vs. Heineken NV |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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