Correlation Between Arhaus and Sonida Senior

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

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

Diversification Opportunities for Arhaus and Sonida Senior

-0.25

Correlation Coefficient

Arhaus  Sonida Senior

Very good diversification

The 3 months correlation between Arhaus and Sonida is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc 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 Arhaus 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 Arhaus Inc 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 Arhaus i.e., Arhaus and Sonida Senior go up and down completely randomly.

Pair Corralation between Arhaus and Sonida Senior

Given the investment horizon of 90 days Arhaus Inc is expected to generate 1.37 times more return on investment than Sonida Senior. However, Arhaus is 1.37 times more volatile than Sonida Senior Living. It trades about 0.17 of its potential returns per unit of risk. Sonida Senior Living is currently generating about -0.06 per unit of risk. If you would invest  874.00  in Arhaus Inc on October 26, 2024 and sell it today you would earn a total of  351.00  from holding Arhaus Inc or generate 40.16% return on investment over 90 days.

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

Arhaus Inc  vs.  Sonida Senior Living

Arhaus Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arhaus Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, Arhaus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Pair Trading with Arhaus and Sonida Senior

The main advantage of trading using opposite Arhaus and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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.

The idea behind Arhaus Inc and Sonida 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.