Correlation Between Sienna Senior and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sienna Senior and Dow Jones 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 Sienna Senior and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sienna Senior Living and Dow Jones Industrial, you can compare the effects of market volatilities on Sienna Senior and Dow Jones 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 Sienna Senior with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Senior and Dow Jones.
Diversification Opportunities for Sienna Senior and Dow Jones
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sienna and Dow is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Sienna Senior 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 Sienna Senior Living are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sienna Senior i.e., Sienna Senior and Dow Jones go up and down completely randomly.
Pair Corralation between Sienna Senior and Dow Jones
Assuming the 90 days trading horizon Sienna Senior Living is expected to generate 1.36 times more return on investment than Dow Jones. However, Sienna Senior is 1.36 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 1,530 in Sienna Senior Living on August 29, 2024 and sell it today you would earn a total of 164.00 from holding Sienna Senior Living or generate 10.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Sienna Senior Living vs. Dow Jones Industrial
Performance |
| Timeline |
Sienna Senior and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sienna Senior Living
Pair trading matchups for Sienna Senior
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sienna Senior and Dow Jones
The main advantage of trading using opposite Sienna Senior and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sienna Senior position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sienna Senior vs. Extendicare | Sienna Senior vs. Chartwell Retirement Residences | Sienna Senior vs. NorthWest Healthcare Properties | Sienna Senior vs. Dream Industrial Real |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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