Correlation Between Central Garden and SunLink Health
Can any of the company-specific risk be diversified away by investing in both Central Garden and SunLink Health 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 Central Garden and SunLink Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Garden Pet and SunLink Health Systems, you can compare the effects of market volatilities on Central Garden and SunLink Health 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 Central Garden with a short position of SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Garden and SunLink Health.
Diversification Opportunities for Central Garden and SunLink Health
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and SunLink is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Central Garden Pet and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems and Central Garden 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 Central Garden Pet are associated (or correlated) with SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of Central Garden i.e., Central Garden and SunLink Health go up and down completely randomly.
Pair Corralation between Central Garden and SunLink Health
Assuming the 90 days horizon Central Garden is expected to generate 2.02 times less return on investment than SunLink Health. But when comparing it to its historical volatility, Central Garden Pet is 2.31 times less risky than SunLink Health. It trades about 0.04 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 61.00 in SunLink Health Systems on September 19, 2024 and sell it today you would earn a total of 14.00 from holding SunLink Health Systems or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Garden Pet vs. SunLink Health Systems
Performance |
| Timeline |
| Central Garden Pet |
| SunLink Health Systems |
Central Garden and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Garden and SunLink Health
The main advantage of trading using opposite Central Garden and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Garden position performs unexpectedly, SunLink Health 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 SunLink Health will offset losses from the drop in SunLink Health's long position.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack | Central Garden vs. Central Garden Pet |
| SunLink Health vs. ASGN Inc | SunLink Health vs. Kforce Inc | SunLink Health vs. Kelly Services A | SunLink Health vs. Central Garden Pet |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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