Correlation Between Sonic Healthcare and Sequoia Financial
Can any of the company-specific risk be diversified away by investing in both Sonic Healthcare and Sequoia Financial 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 Sonic Healthcare and Sequoia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonic Healthcare and Sequoia Financial Group, you can compare the effects of market volatilities on Sonic Healthcare and Sequoia Financial 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 Sonic Healthcare with a short position of Sequoia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonic Healthcare and Sequoia Financial.
Diversification Opportunities for Sonic Healthcare and Sequoia Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sonic and Sequoia is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sonic Healthcare and Sequoia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Financial and Sonic Healthcare 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 Sonic Healthcare are associated (or correlated) with Sequoia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Financial has no effect on the direction of Sonic Healthcare i.e., Sonic Healthcare and Sequoia Financial go up and down completely randomly.
Pair Corralation between Sonic Healthcare and Sequoia Financial
Assuming the 90 days trading horizon Sonic Healthcare is expected to under-perform the Sequoia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Sonic Healthcare is 3.08 times less risky than Sequoia Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Sequoia Financial Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Sequoia Financial Group on October 30, 2024 and sell it today you would earn a total of 7.00 from holding Sequoia Financial Group or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonic Healthcare vs. Sequoia Financial Group
Performance |
| Timeline |
| Sonic Healthcare |
| Sequoia Financial |
Sonic Healthcare and Sequoia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonic Healthcare and Sequoia Financial
The main advantage of trading using opposite Sonic Healthcare and Sequoia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonic Healthcare position performs unexpectedly, Sequoia Financial 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 Sequoia Financial will offset losses from the drop in Sequoia Financial's long position.| Sonic Healthcare vs. M3 Mining | Sonic Healthcare vs. Andean Silver Limited | Sonic Healthcare vs. Beston Global Food | Sonic Healthcare vs. Southern Hemisphere Mining |
| Sequoia Financial vs. Iron Road | Sequoia Financial vs. Pinnacle Investment Management | Sequoia Financial vs. Event Hospitality and | Sequoia Financial vs. Regis Healthcare |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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