Correlation Between Sonida Senior and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Cardinal Health 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 Cardinal Health 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 Cardinal Health, you can compare the effects of market volatilities on Sonida Senior and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Cardinal Health.
Diversification Opportunities for Sonida Senior and Cardinal Health
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sonida and Cardinal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Sonida Senior i.e., Sonida Senior and Cardinal Health go up and down completely randomly.
Pair Corralation between Sonida Senior and Cardinal Health
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.52 times more return on investment than Cardinal Health. However, Sonida Senior is 1.52 times more volatile than Cardinal Health. It trades about 0.37 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.18 per unit of risk. If you would invest 2,134 in Sonida Senior Living on November 8, 2024 and sell it today you would earn a total of 367.00 from holding Sonida Senior Living or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Cardinal Health
Performance |
| Timeline |
| Sonida Senior Living |
| Cardinal Health |
Sonida Senior and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Cardinal Health
The main advantage of trading using opposite Sonida Senior and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding Corp |
| Cardinal Health vs. Pennant Group | Cardinal Health vs. The Ensign Group | Cardinal Health vs. Encompass Health Corp | Cardinal Health vs. Healthcare Services Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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