Correlation Between ModivCare and Sienna Senior

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

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

Diversification Opportunities for ModivCare and Sienna Senior

0.36

Correlation Coefficient

ModivCare  Sienna Senior

Weak diversification

The 3 months correlation between ModivCare and Sienna is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ModivCare and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and ModivCare 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 ModivCare are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of ModivCare i.e., ModivCare and Sienna Senior go up and down completely randomly.

Pair Corralation between ModivCare and Sienna Senior

Given the investment horizon of 90 days ModivCare is expected to under-perform the Sienna Senior. In addition to that, ModivCare is 4.72 times more volatile than Sienna Senior Living. It trades about -0.04 of its total potential returns per unit of risk. Sienna Senior Living is currently generating about -0.16 per unit of volatility. If you would invest  1,237  in Sienna Senior Living on October 1, 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	Very Weak
Accuracy	95.24%
Values	Daily Returns

ModivCare  vs.  Sienna Senior Living

ModivCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ModivCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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.

Pair Trading with ModivCare and Sienna Senior

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

The idea behind ModivCare and Sienna 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.