Correlation Between Sonida Senior and Lincoln Electric
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Lincoln Electric 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 Lincoln Electric 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 Lincoln Electric Holdings, you can compare the effects of market volatilities on Sonida Senior and Lincoln Electric 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 Lincoln Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Lincoln Electric.
Diversification Opportunities for Sonida Senior and Lincoln Electric
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sonida and Lincoln is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Lincoln Electric Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Electric Holdings 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 Lincoln Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Electric Holdings has no effect on the direction of Sonida Senior i.e., Sonida Senior and Lincoln Electric go up and down completely randomly.
Pair Corralation between Sonida Senior and Lincoln Electric
Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Lincoln Electric. But the stock apears to be less risky and, when comparing its historical volatility, Sonida Senior Living is 1.07 times less risky than Lincoln Electric. The stock trades about -0.08 of its potential returns per unit of risk. The Lincoln Electric Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 18,972 in Lincoln Electric Holdings on January 11, 2025 and sell it today you would lose (512.00) from holding Lincoln Electric Holdings or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Lincoln Electric Holdings
Performance |
| Timeline |
| Sonida Senior Living |
| Lincoln Electric Holdings |
Sonida Senior and Lincoln Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Lincoln Electric
The main advantage of trading using opposite Sonida Senior and Lincoln Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Lincoln Electric 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 Lincoln Electric will offset losses from the drop in Lincoln Electric'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 |
| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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