Correlation Between Sienna Senior and Regional Health

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

Diversification Opportunities for Sienna Senior and Regional Health

0.52

Correlation Coefficient

Sienna Senior  Regional Health

Very weak diversification

The 3 months correlation between Sienna and Regional is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of Sienna Senior i.e., Sienna Senior and Regional Health go up and down completely randomly.

Pair Corralation between Sienna Senior and Regional Health

Assuming the 90 days horizon Sienna Senior Living is expected to under-perform the Regional Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sienna Senior Living is 3.1 times less risky than Regional Health. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Regional Health Properties is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Regional Health Properties on September 21, 2024 and sell it today you would lose (1.00) from holding Regional Health Properties or give up 0.66% of portfolio value over 90 days.

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

Sienna Senior Living  vs.  Regional Health Properties

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.

Regional Health Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Regional Health is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sienna Senior and Regional Health

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

The idea behind Sienna Senior Living and Regional Health Properties 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.