Correlation Between Exelixis and Sienna Senior

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

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

Diversification Opportunities for Exelixis and Sienna Senior

-0.35

Correlation Coefficient

Exelixis  Sienna Senior

Very good diversification

The 3 months correlation between Exelixis and Sienna is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis 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 Exelixis 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 Exelixis 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 Exelixis i.e., Exelixis and Sienna Senior go up and down completely randomly.

Pair Corralation between Exelixis and Sienna Senior

Given the investment horizon of 90 days Exelixis is expected to generate 2.09 times more return on investment than Sienna Senior. However, Exelixis is 2.09 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 -0.17 per unit of risk. If you would invest  2,539  in Exelixis on October 8, 2024 and sell it today you would earn a total of  858.00  from holding Exelixis or generate 33.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Exelixis  vs.  Sienna Senior Living

Exelixis

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Exelixis and Sienna Senior

The main advantage of trading using opposite Exelixis and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelixis 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 Exelixis 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.