Correlation Between GMS and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both GMS 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 GMS and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Sonida Senior Living, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Sonida Senior.
Diversification Opportunities for GMS and Sonida Senior
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMS and Sonida is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc 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 GMS 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 GMS Inc 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 GMS i.e., GMS and Sonida Senior go up and down completely randomly.
Pair Corralation between GMS and Sonida Senior
Considering the 90-day investment horizon GMS is expected to generate 3.2 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, GMS Inc is 2.75 times less risky than Sonida Senior. It trades about 0.08 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Sonida Senior Living on August 27, 2024 and sell it today you would earn a total of 1,681 from holding Sonida Senior Living or generate 209.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
GMS Inc vs. Sonida Senior Living
Performance |
| Timeline |
| GMS Inc |
| Sonida Senior Living |
GMS and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Sonida Senior
The main advantage of trading using opposite GMS and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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