Correlation Between Sapiens International and Sonida Senior
Can any of the company-specific risk be diversified away by investing in both Sapiens International and Sonida Senior 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 Sapiens International and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and Sonida Senior Living, you can compare the effects of market volatilities on Sapiens International and Sonida Senior 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 Sapiens International with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and Sonida Senior.
Diversification Opportunities for Sapiens International and Sonida Senior
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sapiens and Sonida is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living and Sapiens International 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 Sapiens International are associated (or correlated) with Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Sapiens International i.e., Sapiens International and Sonida Senior go up and down completely randomly.
Pair Corralation between Sapiens International and Sonida Senior
Given the investment horizon of 90 days Sapiens International is expected to generate 1.91 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, Sapiens International is 2.18 times less risky than Sonida Senior. It trades about 0.05 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sapiens International vs. Sonida Senior Living
Performance |
| Timeline |
| Sapiens International |
| Sonida Senior Living |
Sapiens International and Sonida Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapiens International and Sonida Senior
The main advantage of trading using opposite Sapiens International and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International position performs unexpectedly, Sonida Senior 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 Sonida Senior will offset losses from the drop in Sonida Senior's long position.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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