Correlation Between Sonida Senior and LB Foster
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and LB Foster 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 LB Foster 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 LB Foster, you can compare the effects of market volatilities on Sonida Senior and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and LB Foster.
Diversification Opportunities for Sonida Senior and LB Foster
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonida and FSTR is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Sonida Senior i.e., Sonida Senior and LB Foster go up and down completely randomly.
Pair Corralation between Sonida Senior and LB Foster
Given the investment horizon of 90 days Sonida Senior is expected to generate 10.19 times less return on investment than LB Foster. But when comparing it to its historical volatility, Sonida Senior Living is 1.3 times less risky than LB Foster. It trades about 0.06 of its potential returns per unit of risk. LB Foster is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 1,911 in LB Foster on September 3, 2024 and sell it today you would earn a total of 962.00 from holding LB Foster or generate 50.34% 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. LB Foster
Performance |
| Timeline |
| Sonida Senior Living |
| LB Foster |
Sonida Senior and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and LB Foster
The main advantage of trading using opposite Sonida Senior and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. Acadia Healthcare |
| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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