Correlation Between Sienna Senior and Allied Properties

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

Diversification Opportunities for Sienna Senior and Allied Properties

-0.16

Correlation Coefficient

Sienna Senior  Allied Properties

Good diversification

The 3 months correlation between Sienna and Allied is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Allied Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Properties Real 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 Allied Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Properties Real has no effect on the direction of Sienna Senior i.e., Sienna Senior and Allied Properties go up and down completely randomly.

Pair Corralation between Sienna Senior and Allied Properties

Assuming the 90 days trading horizon Sienna Senior Living is expected to generate 1.22 times more return on investment than Allied Properties. However, Sienna Senior is 1.22 times more volatile than Allied Properties Real. It trades about 0.07 of its potential returns per unit of risk. Allied Properties Real is currently generating about -0.04 per unit of risk. If you would invest  1,547  in Sienna Senior Living on December 31, 2024 and sell it today you would earn a total of  84.00  from holding Sienna Senior Living or generate 5.43% return on investment over 90 days.

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

Sienna Senior Living  vs.  Allied Properties Real

Sienna Senior Living

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Senior Living are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sienna Senior is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Allied Properties Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allied Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allied Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sienna Senior and Allied Properties

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

The idea behind Sienna Senior Living and Allied Properties Real 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.