Correlation Between Sienna Senior and Exchange Income

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

Diversification Opportunities for Sienna Senior and Exchange Income

0.28

Correlation Coefficient

Sienna Senior  Exchange Income

Modest diversification

The 3 months correlation between Sienna and Exchange is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income 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 Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Sienna Senior i.e., Sienna Senior and Exchange Income go up and down completely randomly.

Pair Corralation between Sienna Senior and Exchange Income

Assuming the 90 days trading horizon Sienna Senior Living is expected to under-perform the Exchange Income. In addition to that, Sienna Senior is 1.07 times more volatile than Exchange Income. It trades about -0.02 of its total potential returns per unit of risk. Exchange Income is currently generating about 0.19 per unit of volatility. If you would invest  4,911  in Exchange Income on September 12, 2024 and sell it today you would earn a total of  609.00  from holding Exchange Income or generate 12.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sienna Senior Living  vs.  Exchange Income

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. 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.

Exchange Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exchange Income may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sienna Senior and Exchange Income

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

The idea behind Sienna Senior Living and Exchange Income 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.