Correlation Between Ensign and Sienna Senior
Can any of the company-specific risk be diversified away by investing in both Ensign and Sienna 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 Ensign and Sienna Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Ensign Group and Sienna Senior Living, you can compare the effects of market volatilities on Ensign and Sienna 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 Ensign with a short position of Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign and Sienna Senior.
Diversification Opportunities for Ensign and Sienna Senior
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ensign and Sienna is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Ensign Group and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and Ensign 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 The Ensign Group are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Ensign i.e., Ensign and Sienna Senior go up and down completely randomly.
Pair Corralation between Ensign and Sienna Senior
Assuming the 90 days horizon Ensign is expected to generate 1.12 times less return on investment than Sienna Senior. But when comparing it to its historical volatility, The Ensign Group is 1.44 times less risky than Sienna Senior. It trades about 0.06 of its potential returns per unit of risk. Sienna Senior Living is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 646.00 in Sienna Senior Living on October 13, 2024 and sell it today you would earn a total of 334.00 from holding Sienna Senior Living or generate 51.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Ensign Group vs. Sienna Senior Living
Performance |
| Timeline |
| Ensign Group |
| Sienna Senior Living |
Ensign and Sienna Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign and Sienna Senior
The main advantage of trading using opposite Ensign and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign position performs unexpectedly, Sienna 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 Sienna Senior will offset losses from the drop in Sienna Senior's long position.| Ensign vs. Jupiter Fund Management | Ensign vs. Singapore Airlines Limited | Ensign vs. United Airlines Holdings | Ensign vs. Q2M Managementberatung AG |
| Sienna Senior vs. Amkor Technology | Sienna Senior vs. Hanison Construction Holdings | Sienna Senior vs. BJs Restaurants | Sienna Senior vs. ASPEN TECHINC DL |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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