Correlation Between United Parks and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both United Parks 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 United Parks and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parks Resorts and Sonida Senior Living, you can compare the effects of market volatilities on United Parks 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 United Parks with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parks and Sonida Senior.
Diversification Opportunities for United Parks and Sonida Senior
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Sonida is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Parks Resorts 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 United Parks 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 United Parks Resorts 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 United Parks i.e., United Parks and Sonida Senior go up and down completely randomly.
Pair Corralation between United Parks and Sonida Senior
Given the investment horizon of 90 days United Parks Resorts is expected to generate 0.56 times more return on investment than Sonida Senior. However, United Parks Resorts is 1.79 times less risky than Sonida Senior. It trades about 0.06 of its potential returns per unit of risk. Sonida Senior Living is currently generating about -0.02 per unit of risk. If you would invest 4,977 in United Parks Resorts on September 3, 2024 and sell it today you would earn a total of 887.00 from holding United Parks Resorts or generate 17.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parks Resorts vs. Sonida Senior Living
Performance |
| Timeline |
| United Parks Resorts |
| Sonida Senior Living |
United Parks and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parks and Sonida Senior
The main advantage of trading using opposite United Parks and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parks 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.| United Parks vs. Transportadora de Gas | United Parks vs. NiSource | United Parks vs. PGE Corp | United Parks vs. Integral Ad Science |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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