Correlation Between Sienna Senior and Brainsway

Can any of the company-specific risk be diversified away by investing in both Sienna Senior and Brainsway 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 Brainsway 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 Brainsway, you can compare the effects of market volatilities on Sienna Senior and Brainsway 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 Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Senior and Brainsway.

Diversification Opportunities for Sienna Senior and Brainsway

-0.32

Correlation Coefficient

Sienna Senior  Brainsway

Very good diversification

The 3 months correlation between Sienna and Brainsway is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Sienna Senior i.e., Sienna Senior and Brainsway go up and down completely randomly.

Pair Corralation between Sienna Senior and Brainsway

Assuming the 90 days horizon Sienna Senior Living is expected to generate 0.63 times more return on investment than Brainsway. However, Sienna Senior Living is 1.59 times less risky than Brainsway. It trades about 0.05 of its potential returns per unit of risk. Brainsway is currently generating about 0.02 per unit of risk. If you would invest  1,088  in Sienna Senior Living on December 30, 2024 and sell it today you would earn a total of  46.00  from holding Sienna Senior Living or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Sienna Senior Living  vs.  Brainsway

Sienna Senior Living

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Senior Living are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Sienna Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brainsway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Brainsway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sienna Senior and Brainsway

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

The idea behind Sienna Senior Living and Brainsway 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.