Correlation Between Summit Therapeutics and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Summit Therapeutics 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 Summit Therapeutics and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Therapeutics PLC and Sonida Senior Living, you can compare the effects of market volatilities on Summit Therapeutics 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 Summit Therapeutics with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Therapeutics and Sonida Senior.
Diversification Opportunities for Summit Therapeutics and Sonida Senior
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Sonida is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC 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 Summit Therapeutics 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 Summit Therapeutics PLC 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 Summit Therapeutics i.e., Summit Therapeutics and Sonida Senior go up and down completely randomly.
Pair Corralation between Summit Therapeutics and Sonida Senior
Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 2.19 times more return on investment than Sonida Senior. However, Summit Therapeutics is 2.19 times more volatile than Sonida Senior Living. It trades about 0.02 of its potential returns per unit of risk. Sonida Senior Living is currently generating about -0.39 per unit of risk. If you would invest 1,783 in Summit Therapeutics PLC on October 14, 2024 and sell it today you would earn a total of 2.00 from holding Summit Therapeutics PLC or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Therapeutics PLC vs. Sonida Senior Living
Performance |
| Timeline |
| Summit Therapeutics PLC |
| Sonida Senior Living |
Summit Therapeutics and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Therapeutics and Sonida Senior
The main advantage of trading using opposite Summit Therapeutics and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics 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.| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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