Correlation Between Medical Facilities and Sonida Senior

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

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

Diversification Opportunities for Medical Facilities and Sonida Senior

0.55

Correlation Coefficient

Medical Facilities  Sonida Senior

Very weak diversification

The 3 months correlation between Medical and Sonida is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Medical Facilities and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living and Medical Facilities 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 Medical Facilities are associated (or correlated) with Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Medical Facilities i.e., Medical Facilities and Sonida Senior go up and down completely randomly.

Pair Corralation between Medical Facilities and Sonida Senior

Assuming the 90 days horizon Medical Facilities is expected to generate 1.22 times less return on investment than Sonida Senior. But when comparing it to its historical volatility, Medical Facilities is 2.53 times less risky than Sonida Senior. It trades about 0.11 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,154  in Sonida Senior Living on November 29, 2024 and sell it today you would earn a total of  1,210  from holding Sonida Senior Living or generate 104.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.72%
Values	Daily Returns

Medical Facilities  vs.  Sonida Senior Living

Medical Facilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medical Facilities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Medical Facilities may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sonida Senior Living

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Medical Facilities and Sonida Senior

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

The idea behind Medical Facilities and Sonida 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.