Correlation Between Pool and SunLink Health
Can any of the company-specific risk be diversified away by investing in both Pool 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 Pool and SunLink Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and SunLink Health Systems, you can compare the effects of market volatilities on Pool 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 Pool with a short position of SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and SunLink Health.
Diversification Opportunities for Pool and SunLink Health
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pool and SunLink is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. 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 Pool 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 Pool Corporation 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 Pool i.e., Pool and SunLink Health go up and down completely randomly.
Pair Corralation between Pool and SunLink Health
Given the investment horizon of 90 days Pool is expected to generate 1.92 times less return on investment than SunLink Health. But when comparing it to its historical volatility, Pool Corporation is 2.3 times less risky than SunLink Health. It trades about 0.11 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 80.00 in SunLink Health Systems on September 1, 2024 and sell it today you would earn a total of 6.00 from holding SunLink Health Systems or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. SunLink Health Systems
Performance |
| Timeline |
| Pool |
| SunLink Health Systems |
Pool and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and SunLink Health
The main advantage of trading using opposite Pool and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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.The idea behind Pool Corporation and SunLink Health Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SunLink Health vs. Leafly Holdings | SunLink Health vs. Allstar Health Brands | SunLink Health vs. Leafly Holdings | SunLink Health vs. Kiaro Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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