Correlation Between Sonida Senior and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and KLA Tencor 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 KLA Tencor 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 KLA Tencor, you can compare the effects of market volatilities on Sonida Senior and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and KLA Tencor.
Diversification Opportunities for Sonida Senior and KLA Tencor
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonida and KLA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Sonida Senior i.e., Sonida Senior and KLA Tencor go up and down completely randomly.
Pair Corralation between Sonida Senior and KLA Tencor
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.97 times more return on investment than KLA Tencor. However, Sonida Senior is 1.97 times more volatile than KLA Tencor. It trades about 0.05 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.05 per unit of risk. If you would invest 1,332 in Sonida Senior Living on August 31, 2024 and sell it today you would earn a total of 1,274 from holding Sonida Senior Living or generate 95.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Sonida Senior Living vs. KLA Tencor
Performance |
| Timeline |
| Sonida Senior Living |
| KLA Tencor |
Sonida Senior and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and KLA Tencor
The main advantage of trading using opposite Sonida Senior and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor'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 |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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