Correlation Between GMO Internet and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Sonida Senior Living, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Sonida Senior.
Diversification Opportunities for GMO Internet and Sonida Senior
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between GMO and Sonida is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet 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 GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and Sonida Senior go up and down completely randomly.
Pair Corralation between GMO Internet and Sonida Senior
Assuming the 90 days horizon GMO Internet is expected to generate 0.85 times more return on investment than Sonida Senior. However, GMO Internet is 1.18 times less risky than Sonida Senior. It trades about -0.16 of its potential returns per unit of risk. Sonida Senior Living is currently generating about -0.39 per unit of risk. If you would invest 1,775 in GMO Internet on October 14, 2024 and sell it today you would lose (95.00) from holding GMO Internet or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GMO Internet vs. Sonida Senior Living
Performance |
| Timeline |
| GMO Internet |
| Sonida Senior Living |
GMO Internet and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Sonida Senior
The main advantage of trading using opposite GMO Internet and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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