Correlation Between Sonida Senior and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and BBB Foods 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 BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on Sonida Senior and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and BBB Foods.
Diversification Opportunities for Sonida Senior and BBB Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sonida and BBB is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Sonida Senior i.e., Sonida Senior and BBB Foods go up and down completely randomly.
Pair Corralation between Sonida Senior and BBB Foods
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.65 times more return on investment than BBB Foods. However, Sonida Senior Living is 1.54 times less risky than BBB Foods. It trades about 0.2 of its potential returns per unit of risk. BBB Foods is currently generating about -0.14 per unit of risk. If you would invest 2,227 in Sonida Senior Living on September 20, 2024 and sell it today you would earn a total of 223.00 from holding Sonida Senior Living or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. BBB Foods
Performance |
| Timeline |
| Sonida Senior Living |
| BBB Foods |
Sonida Senior and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and BBB Foods
The main advantage of trading using opposite Sonida Senior and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.The idea behind Sonida Senior Living and BBB Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BBB Foods vs. Fomento Economico Mexicano | BBB Foods vs. PepsiCo | BBB Foods vs. United Microelectronics | BBB Foods vs. Eltek |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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