Correlation Between Sonida Senior and GMO Internet
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on Sonida Senior and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and GMO Internet.
Diversification Opportunities for Sonida Senior and GMO Internet
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sonida and GMO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Sonida Senior i.e., Sonida Senior and GMO Internet go up and down completely randomly.
Pair Corralation between Sonida Senior and GMO Internet
Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the GMO Internet. In addition to that, Sonida Senior is 1.18 times more volatile than GMO Internet. It trades about -0.39 of its total potential returns per unit of risk. GMO Internet is currently generating about -0.16 per unit of volatility. If you would invest 1,775 in GMO Internet on October 14, 2024 and sell it today you would lose (95.00) from holding GMO Internet or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sonida Senior Living vs. GMO Internet
Performance |
| Timeline |
| Sonida Senior Living |
| GMO Internet |
Sonida Senior and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and GMO Internet
The main advantage of trading using opposite Sonida Senior and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet'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 |
| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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