Correlation Between Sonida Senior and Summit Midstream
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and Summit Midstream 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 Summit Midstream 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 Summit Midstream, you can compare the effects of market volatilities on Sonida Senior and Summit Midstream 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 Summit Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and Summit Midstream.
Diversification Opportunities for Sonida Senior and Summit Midstream
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sonida and Summit is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream 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 Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of Sonida Senior i.e., Sonida Senior and Summit Midstream go up and down completely randomly.
Pair Corralation between Sonida Senior and Summit Midstream
Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Summit Midstream. In addition to that, Sonida Senior is 1.29 times more volatile than Summit Midstream. It trades about -0.01 of its total potential returns per unit of risk. Summit Midstream is currently generating about 0.02 per unit of volatility. If you would invest 3,693 in Summit Midstream on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Summit Midstream or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. Summit Midstream
Performance |
| Timeline |
| Sonida Senior Living |
| Summit Midstream |
Sonida Senior and Summit Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and Summit Midstream
The main advantage of trading using opposite Sonida Senior and Summit Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, Summit Midstream 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 Summit Midstream will offset losses from the drop in Summit Midstream'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 |
| Summit Midstream vs. Atlantica Sustainable Infrastructure | Summit Midstream vs. Clearway Energy | Summit Midstream vs. Brookfield Renewable Corp | Summit Midstream vs. Nextera Energy Partners |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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