Correlation Between Sienna Senior and Numinus Wellness

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

Diversification Opportunities for Sienna Senior and Numinus Wellness

0.49

Correlation Coefficient

Sienna Senior  Numinus Wellness

Very weak diversification

The 3 months correlation between Sienna and Numinus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Numinus Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numinus Wellness 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 Numinus Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numinus Wellness has no effect on the direction of Sienna Senior i.e., Sienna Senior and Numinus Wellness go up and down completely randomly.

Pair Corralation between Sienna Senior and Numinus Wellness

Assuming the 90 days trading horizon Sienna Senior is expected to generate 7.4 times less return on investment than Numinus Wellness. But when comparing it to its historical volatility, Sienna Senior Living is 5.7 times less risky than Numinus Wellness. It trades about 0.08 of its potential returns per unit of risk. Numinus Wellness is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Numinus Wellness on December 30, 2024 and sell it today you would earn a total of  1.50  from holding Numinus Wellness or generate 42.86% return on investment over 90 days.

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

Sienna Senior Living  vs.  Numinus Wellness

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 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sienna Senior may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Numinus Wellness

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Numinus Wellness are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Numinus Wellness displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sienna Senior and Numinus Wellness

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

The idea behind Sienna Senior Living and Numinus Wellness 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.