Correlation Between Sonida Senior and SunLink Health
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and SunLink Health 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 SunLink Health 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 SunLink Health Systems, you can compare the effects of market volatilities on Sonida Senior and SunLink Health 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 SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and SunLink Health.
Diversification Opportunities for Sonida Senior and SunLink Health
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sonida and SunLink is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of Sonida Senior i.e., Sonida Senior and SunLink Health go up and down completely randomly.
Pair Corralation between Sonida Senior and SunLink Health
Given the investment horizon of 90 days Sonida Senior is expected to generate 10.17 times less return on investment than SunLink Health. But when comparing it to its historical volatility, Sonida Senior Living is 1.37 times less risky than SunLink Health. It trades about 0.01 of its potential returns per unit of risk. SunLink Health Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 70.00 in SunLink Health Systems on September 2, 2024 and sell it today you would earn a total of 16.00 from holding SunLink Health Systems or generate 22.86% 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. SunLink Health Systems
Performance |
| Timeline |
| Sonida Senior Living |
| SunLink Health Systems |
Sonida Senior and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and SunLink Health
The main advantage of trading using opposite Sonida Senior and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, SunLink Health 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 SunLink Health will offset losses from the drop in SunLink Health'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 |
| SunLink Health vs. Humana Inc | SunLink Health vs. Cigna Corp | SunLink Health vs. Elevance Health | SunLink Health vs. Centene Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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