Correlation Between Sonida Senior and LATAM Airlines
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and LATAM Airlines 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 LATAM Airlines 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 LATAM Airlines Group, you can compare the effects of market volatilities on Sonida Senior and LATAM Airlines 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 LATAM Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and LATAM Airlines.
Diversification Opportunities for Sonida Senior and LATAM Airlines
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonida and LATAM is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and LATAM Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LATAM Airlines 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 LATAM Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LATAM Airlines Group has no effect on the direction of Sonida Senior i.e., Sonida Senior and LATAM Airlines go up and down completely randomly.
Pair Corralation between Sonida Senior and LATAM Airlines
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 3.39 times more return on investment than LATAM Airlines. However, Sonida Senior is 3.39 times more volatile than LATAM Airlines Group. It trades about 0.09 of its potential returns per unit of risk. LATAM Airlines Group is currently generating about 0.1 per unit of risk. If you would invest 980.00 in Sonida Senior Living on September 14, 2024 and sell it today you would earn a total of 1,439 from holding Sonida Senior Living or generate 146.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.76% |
| Values | Daily Returns |
Sonida Senior Living vs. LATAM Airlines Group
Performance |
| Timeline |
| Sonida Senior Living |
| LATAM Airlines Group |
Sonida Senior and LATAM Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and LATAM Airlines
The main advantage of trading using opposite Sonida Senior and LATAM Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, LATAM Airlines 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 LATAM Airlines will offset losses from the drop in LATAM Airlines' long position.| Sonida Senior vs. Avita Medical | Sonida Senior vs. Sight Sciences | Sonida Senior vs. Treace Medical Concepts | Sonida Senior vs. Neuropace |
| LATAM Airlines vs. Reservoir Media | LATAM Airlines vs. Akanda Corp | LATAM Airlines vs. NuRAN Wireless | LATAM Airlines vs. Sonida Senior Living |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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