Correlation Between Aveanna Healthcare and Sonida Senior

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

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

Diversification Opportunities for Aveanna Healthcare and Sonida Senior

0.09

Correlation Coefficient

Aveanna Healthcare  Sonida Senior

Significant diversification

The 3 months correlation between Aveanna and Sonida is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aveanna Healthcare Holdings 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 Aveanna Healthcare 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 Aveanna Healthcare Holdings 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 Aveanna Healthcare i.e., Aveanna Healthcare and Sonida Senior go up and down completely randomly.

Pair Corralation between Aveanna Healthcare and Sonida Senior

Given the investment horizon of 90 days Aveanna Healthcare Holdings is expected to under-perform the Sonida Senior. In addition to that, Aveanna Healthcare is 1.17 times more volatile than Sonida Senior Living. It trades about -0.05 of its total potential returns per unit of risk. Sonida Senior Living is currently generating about -0.04 per unit of volatility. If you would invest  2,646  in Sonida Senior Living on September 23, 2024 and sell it today you would lose (276.00) from holding Sonida Senior Living or give up 10.43% of portfolio value over 90 days.

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

Aveanna Healthcare Holdings  vs.  Sonida Senior Living

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aveanna Healthcare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 inconsistent 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 Aveanna Healthcare and Sonida Senior

The main advantage of trading using opposite Aveanna Healthcare and Sonida Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aveanna Healthcare 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 Aveanna Healthcare Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.