Correlation Between Sonida Senior and United Homes
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and United Homes 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 United Homes 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 United Homes Group, you can compare the effects of market volatilities on Sonida Senior and United Homes 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 United Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and United Homes.
Diversification Opportunities for Sonida Senior and United Homes
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonida and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and United Homes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Homes 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 United Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Homes Group has no effect on the direction of Sonida Senior i.e., Sonida Senior and United Homes go up and down completely randomly.
Pair Corralation between Sonida Senior and United Homes
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.73 times more return on investment than United Homes. However, Sonida Senior Living is 1.37 times less risky than United Homes. It trades about 0.05 of its potential returns per unit of risk. United Homes Group is currently generating about 0.01 per unit of risk. If you would invest 1,575 in Sonida Senior Living on September 2, 2024 and sell it today you would earn a total of 1,031 from holding Sonida Senior Living or generate 65.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sonida Senior Living vs. United Homes Group
Performance |
| Timeline |
| Sonida Senior Living |
| United Homes Group |
Sonida Senior and United Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and United Homes
The main advantage of trading using opposite Sonida Senior and United Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, United Homes 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 United Homes will offset losses from the drop in United Homes' 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 |
| United Homes vs. VF Corporation | United Homes vs. Levi Strauss Co | United Homes vs. Columbia Sportswear | United Homes vs. Oxford Industries |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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