Correlation Between Sienna Senior and Exchange Income
Can any of the company-specific risk be diversified away by investing in both Sienna Senior and Exchange Income 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 Exchange Income 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 Exchange Income, you can compare the effects of market volatilities on Sienna Senior and Exchange Income 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 Exchange Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Senior and Exchange Income.
Diversification Opportunities for Sienna Senior and Exchange Income
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sienna and Exchange is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income 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 Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Sienna Senior i.e., Sienna Senior and Exchange Income go up and down completely randomly.
Pair Corralation between Sienna Senior and Exchange Income
Assuming the 90 days trading horizon Sienna Senior Living is expected to generate 1.07 times more return on investment than Exchange Income. However, Sienna Senior is 1.07 times more volatile than Exchange Income. It trades about 0.17 of its potential returns per unit of risk. Exchange Income is currently generating about 0.09 per unit of risk. If you would invest 1,006 in Sienna Senior Living on August 25, 2024 and sell it today you would earn a total of 678.00 from holding Sienna Senior Living or generate 67.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sienna Senior Living vs. Exchange Income
Performance |
| Timeline |
| Sienna Senior Living |
| Exchange Income |
Sienna Senior and Exchange Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sienna Senior and Exchange Income
The main advantage of trading using opposite Sienna Senior and Exchange Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sienna Senior position performs unexpectedly, Exchange Income 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 Exchange Income will offset losses from the drop in Exchange Income's long position.| Sienna Senior vs. Extendicare | Sienna Senior vs. Chartwell Retirement Residences | Sienna Senior vs. NorthWest Healthcare Properties | Sienna Senior vs. Dream Industrial Real |
| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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