Correlation Between Sonida Senior and AMN Healthcare

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

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

Diversification Opportunities for Sonida Senior and AMN Healthcare

-0.18

Correlation Coefficient

Sonida Senior  AMN Healthcare

Good diversification

The 3 months correlation between Sonida and AMN is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services and Sonida 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 Sonida Senior Living are associated (or correlated) with AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Sonida Senior i.e., Sonida Senior and AMN Healthcare go up and down completely randomly.

Pair Corralation between Sonida Senior and AMN Healthcare

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.79 times more return on investment than AMN Healthcare. However, Sonida Senior Living is 1.27 times less risky than AMN Healthcare. It trades about 0.01 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about 0.0 per unit of risk. If you would invest  2,291  in Sonida Senior Living on December 27, 2024 and sell it today you would earn a total of  5.00  from holding Sonida Senior Living or generate 0.22% return on investment over 90 days.

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

Sonida Senior Living  vs.  AMN Healthcare Services

Sonida Senior Living

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sonida Senior Living are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AMN Healthcare Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, AMN Healthcare is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sonida Senior and AMN Healthcare

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

The idea behind Sonida Senior Living and AMN Healthcare Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.