Correlation Between Sonida Senior and Ensign
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Ensign 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 Ensign 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 The Ensign Group, you can compare the effects of market volatilities on Sonida Senior and Ensign 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 Ensign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Ensign.
Diversification Opportunities for Sonida Senior and Ensign
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonida and Ensign is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group 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 Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of Sonida Senior i.e., Sonida Senior and Ensign go up and down completely randomly.
Pair Corralation between Sonida Senior and Ensign
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.95 times more return on investment than Ensign. However, Sonida Senior Living is 1.05 times less risky than Ensign. It trades about 0.3 of its potential returns per unit of risk. The Ensign Group is currently generating about 0.05 per unit of risk. If you would invest 2,134 in Sonida Senior Living on November 9, 2024 and sell it today you would earn a total of 301.00 from holding Sonida Senior Living or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. The Ensign Group
Performance |
| Timeline |
| Sonida Senior Living |
| Ensign Group |
Sonida Senior and Ensign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Ensign
The main advantage of trading using opposite Sonida Senior and Ensign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Ensign 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 Ensign will offset losses from the drop in Ensign'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 |
| Ensign vs. Enhabit | Ensign vs. Pennant Group | Ensign vs. InnovAge Holding Corp | Ensign vs. National HealthCare |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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