Correlation Between Sienna Senior and Fresenius

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

Diversification Opportunities for Sienna Senior and Fresenius

0.61

Correlation Coefficient

Sienna Senior  Fresenius

Poor diversification

The 3 months correlation between Sienna and Fresenius is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Sienna Senior i.e., Sienna Senior and Fresenius go up and down completely randomly.

Pair Corralation between Sienna Senior and Fresenius

Assuming the 90 days horizon Sienna Senior Living is expected to generate 0.66 times more return on investment than Fresenius. However, Sienna Senior Living is 1.52 times less risky than Fresenius. It trades about -0.15 of its potential returns per unit of risk. Fresenius SE Co is currently generating about -0.1 per unit of risk. If you would invest  1,237  in Sienna Senior Living on September 30, 2024 and sell it today you would lose (133.00) from holding Sienna Senior Living or give up 10.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Sienna Senior Living  vs.  Fresenius SE Co

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 weak 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.

Fresenius SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresenius SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 Sienna Senior and Fresenius

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

The idea behind Sienna Senior Living and Fresenius SE Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.