Correlation Between CareRx and Sienna Senior
Can any of the company-specific risk be diversified away by investing in both CareRx 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 CareRx and Sienna Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CareRx and Sienna Senior Living, you can compare the effects of market volatilities on CareRx 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 CareRx with a short position of Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareRx and Sienna Senior.
Diversification Opportunities for CareRx and Sienna Senior
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CareRx and Sienna is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CareRx 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 CareRx 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 CareRx 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 CareRx i.e., CareRx and Sienna Senior go up and down completely randomly.
Pair Corralation between CareRx and Sienna Senior
Assuming the 90 days horizon CareRx is expected to generate 2.37 times more return on investment than Sienna Senior. However, CareRx is 2.37 times more volatile than Sienna Senior Living. It trades about 0.16 of its potential returns per unit of risk. Sienna Senior Living is currently generating about -0.28 per unit of risk. If you would invest 128.00 in CareRx on October 21, 2024 and sell it today you would earn a total of 13.00 from holding CareRx or generate 10.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 90.48% |
Values | Daily Returns |
CareRx vs. Sienna Senior Living
Performance |
Timeline |
CareRx |
Sienna Senior Living |
CareRx and Sienna Senior Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CareRx and Sienna Senior
The main advantage of trading using opposite CareRx and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CareRx 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 CareRx 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.Sienna Senior vs. Solitron Devices | Sienna Senior vs. Ieh Corp | Sienna Senior vs. SCI Engineered Materials | Sienna Senior vs. Surge Components |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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