Correlation Between Sonida Senior and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Sonida Senior and WashTec AG 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 WashTec AG 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 WashTec AG, you can compare the effects of market volatilities on Sonida Senior and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and WashTec AG.
Diversification Opportunities for Sonida Senior and WashTec AG
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sonida and WashTec is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Sonida Senior i.e., Sonida Senior and WashTec AG go up and down completely randomly.
Pair Corralation between Sonida Senior and WashTec AG
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.85 times more return on investment than WashTec AG. However, Sonida Senior is 1.85 times more volatile than WashTec AG. It trades about 0.1 of its potential returns per unit of risk. WashTec AG is currently generating about 0.08 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sonida Senior Living vs. WashTec AG
Performance |
| Timeline |
| Sonida Senior Living |
| WashTec AG |
Sonida Senior and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and WashTec AG
The main advantage of trading using opposite Sonida Senior and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG's long position.| Sonida Senior vs. Baxter International | Sonida Senior vs. West Pharmaceutical Services | Sonida Senior vs. ResMed Inc | Sonida Senior vs. The Cooper Companies, |
| WashTec AG vs. Pennant Group | WashTec AG vs. Encompass Health Corp | WashTec AG vs. Enhabit | WashTec AG vs. Concord Medical Services |
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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