Correlation Between Sonida Senior and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Compania Cervecerias 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 Compania Cervecerias 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 Compania Cervecerias Unidas, you can compare the effects of market volatilities on Sonida Senior and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Compania Cervecerias.
Diversification Opportunities for Sonida Senior and Compania Cervecerias
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sonida and Compania is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Sonida Senior i.e., Sonida Senior and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Sonida Senior and Compania Cervecerias
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 3.0 times more return on investment than Compania Cervecerias. However, Sonida Senior is 3.0 times more volatile than Compania Cervecerias Unidas. It trades about 0.09 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.02 per unit of risk. If you would invest 905.00 in Sonida Senior Living on September 19, 2024 and sell it today you would earn a total of 1,417 from holding Sonida Senior Living or generate 156.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Sonida Senior Living |
| Compania Cervecerias |
Sonida Senior and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Compania Cervecerias
The main advantage of trading using opposite Sonida Senior and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.The idea behind Sonida Senior Living and Compania Cervecerias Unidas pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Compania Cervecerias vs. Fomento Economico Mexicano | Compania Cervecerias vs. Carlsberg AS | Compania Cervecerias vs. Anheuser Busch Inbev | Compania Cervecerias vs. Heineken NV |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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