Correlation Between Pennant and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Pennant 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 Pennant and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pennant Group and Sonida Senior Living, you can compare the effects of market volatilities on Pennant 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 Pennant with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and Sonida Senior.
Diversification Opportunities for Pennant and Sonida Senior
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pennant and Sonida is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group 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 Pennant 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 Pennant Group 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 Pennant i.e., Pennant and Sonida Senior go up and down completely randomly.
Pair Corralation between Pennant and Sonida Senior
Given the investment horizon of 90 days Pennant is expected to generate 1.11 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, Pennant Group is 1.03 times less risky than Sonida Senior. It trades about 0.1 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,288 in Sonida Senior Living on November 2, 2024 and sell it today you would earn a total of 99.00 from holding Sonida Senior Living or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pennant Group vs. Sonida Senior Living
Performance |
| Timeline |
| Pennant Group |
| Sonida Senior Living |
Pennant and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pennant and Sonida Senior
The main advantage of trading using opposite Pennant and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pennant 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.| Pennant vs. Encompass Health Corp | Pennant vs. Acadia Healthcare | Pennant vs. Select Medical Holdings | Pennant vs. Addus HomeCare |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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