Correlation Between Amedisys and Sienna Senior

Can any of the company-specific risk be diversified away by investing in both Amedisys and Sienna 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 Amedisys and Sienna Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amedisys and Sienna Senior Living, you can compare the effects of market volatilities on Amedisys and Sienna 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 Amedisys with a short position of Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedisys and Sienna Senior.

Diversification Opportunities for Amedisys and Sienna Senior

0.74

Correlation Coefficient

Amedisys  Sienna Senior

Poor diversification

The 3 months correlation between Amedisys and Sienna is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and Amedisys 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 Amedisys are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Amedisys i.e., Amedisys and Sienna Senior go up and down completely randomly.

Pair Corralation between Amedisys and Sienna Senior

Given the investment horizon of 90 days Amedisys is expected to generate 1.08 times more return on investment than Sienna Senior. However, Amedisys is 1.08 times more volatile than Sienna Senior Living. It trades about -0.21 of its potential returns per unit of risk. Sienna Senior Living is currently generating about -0.31 per unit of risk. If you would invest  9,000  in Amedisys on September 21, 2024 and sell it today you would lose (553.00) from holding Amedisys or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amedisys  vs.  Sienna Senior Living

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sienna Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sienna Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Amedisys and Sienna Senior

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

The idea behind Amedisys and Sienna Senior Living 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.