Correlation Between Sonida Senior and CIGNA

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Can any of the company-specific risk be diversified away by investing in both Sonida Senior and CIGNA 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 CIGNA 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 CIGNA P, you can compare the effects of market volatilities on Sonida Senior and CIGNA 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 CIGNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and CIGNA.

Diversification Opportunities for Sonida Senior and CIGNA

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Sonida and CIGNA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and CIGNA P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIGNA P 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 CIGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIGNA P has no effect on the direction of Sonida Senior i.e., Sonida Senior and CIGNA go up and down completely randomly.

Pair Corralation between Sonida Senior and CIGNA

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 18.95 times more return on investment than CIGNA. However, Sonida Senior is 18.95 times more volatile than CIGNA P. It trades about 0.1 of its potential returns per unit of risk. CIGNA P is currently generating about 0.02 per unit of risk. If you would invest  952.00  in Sonida Senior Living on September 4, 2024 and sell it today you would earn a total of  1,610  from holding Sonida Senior Living or generate 169.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

Sonida Senior Living  vs.  CIGNA P

 Performance 
       Timeline  
Sonida Senior Living 

Risk-Adjusted Performance

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Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
CIGNA P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CIGNA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CIGNA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Sonida Senior and CIGNA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sonida Senior and CIGNA

The main advantage of trading using opposite Sonida Senior and CIGNA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, CIGNA 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 CIGNA will offset losses from the drop in CIGNA's long position.
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The idea behind Sonida Senior Living and CIGNA P 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.
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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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