Correlation Between Sonida Senior and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Arrow 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 Sonida Senior and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonida Senior Living and Arrow Financial, you can compare the effects of market volatilities on Sonida Senior and Arrow 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 Sonida Senior with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Arrow Financial.
Diversification Opportunities for Sonida Senior and Arrow Financial
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonida and Arrow is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and Sonida 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 Sonida Senior Living are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Sonida Senior i.e., Sonida Senior and Arrow Financial go up and down completely randomly.
Pair Corralation between Sonida Senior and Arrow Financial
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 2.1 times more return on investment than Arrow Financial. However, Sonida Senior is 2.1 times more volatile than Arrow Financial. It trades about 0.04 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.02 per unit of risk. If you would invest 1,650 in Sonida Senior Living on August 29, 2024 and sell it today you would earn a total of 933.00 from holding Sonida Senior Living or generate 56.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sonida Senior Living vs. Arrow Financial
Performance |
| Timeline |
| Sonida Senior Living |
| Arrow Financial |
Sonida Senior and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Arrow Financial
The main advantage of trading using opposite Sonida Senior and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Arrow 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. InnovAge Holding Corp | Sonida Senior vs. Acadia Healthcare |
| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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