Correlation Between Mesabi Trust and Sienna Senior

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

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

Diversification Opportunities for Mesabi Trust and Sienna Senior

-0.76

Correlation Coefficient

Mesabi Trust  Sienna Senior

Pay attention - limited upside

The 3 months correlation between Mesabi and Sienna is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust 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 Mesabi Trust 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 Mesabi Trust 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 Mesabi Trust i.e., Mesabi Trust and Sienna Senior go up and down completely randomly.

Pair Corralation between Mesabi Trust and Sienna Senior

Considering the 90-day investment horizon Mesabi Trust is expected to generate 2.79 times more return on investment than Sienna Senior. However, Mesabi Trust is 2.79 times more volatile than Sienna Senior Living. It trades about 0.19 of its potential returns per unit of risk. Sienna Senior Living is currently generating about -0.04 per unit of risk. If you would invest  1,695  in Mesabi Trust on October 3, 2024 and sell it today you would earn a total of  1,116  from holding Mesabi Trust or generate 65.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Mesabi Trust  vs.  Sienna Senior Living

Mesabi Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

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 fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mesabi Trust and Sienna Senior

The main advantage of trading using opposite Mesabi Trust and Sienna Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust 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 Mesabi Trust 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.