Correlation Between Sienna Senior and AMN Healthcare

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

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

Diversification Opportunities for Sienna Senior and AMN Healthcare

0.69

Correlation Coefficient

Sienna Senior  AMN Healthcare

Poor diversification

The 3 months correlation between Sienna and AMN is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services and Sienna Senior 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 Sienna Senior Living are associated (or correlated) with AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Sienna Senior i.e., Sienna Senior and AMN Healthcare go up and down completely randomly.

Pair Corralation between Sienna Senior and AMN Healthcare

Assuming the 90 days horizon Sienna Senior Living is expected to under-perform the AMN Healthcare. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sienna Senior Living is 2.85 times less risky than AMN Healthcare. The pink sheet trades about -0.31 of its potential returns per unit of risk. The AMN Healthcare Services is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,480  in AMN Healthcare Services on September 21, 2024 and sell it today you would lose (186.00) from holding AMN Healthcare Services or give up 7.5% of portfolio value over 90 days.

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

Sienna Senior Living  vs.  AMN Healthcare Services

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.

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sienna Senior and AMN Healthcare

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

The idea behind Sienna Senior Living and AMN Healthcare Services 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.