Correlation Between Sonida Senior and Aveanna Healthcare

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

Diversification Opportunities for Sonida Senior and Aveanna Healthcare

0.09

Correlation Coefficient

Sonida Senior  Aveanna Healthcare

Significant diversification

The 3 months correlation between Sonida and Aveanna is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Aveanna Healthcare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveanna Healthcare 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 Aveanna Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveanna Healthcare has no effect on the direction of Sonida Senior i.e., Sonida Senior and Aveanna Healthcare go up and down completely randomly.

Pair Corralation between Sonida Senior and Aveanna Healthcare

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.84 times more return on investment than Aveanna Healthcare. However, Sonida Senior Living is 1.19 times less risky than Aveanna Healthcare. It trades about -0.05 of its potential returns per unit of risk. Aveanna Healthcare Holdings is currently generating about -0.05 per unit of risk. If you would invest  2,563  in Sonida Senior Living on September 23, 2024 and sell it today you would lose (193.00) from holding Sonida Senior Living or give up 7.53% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  Aveanna Healthcare Holdings

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aveanna Healthcare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Sonida Senior and Aveanna Healthcare

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

The idea behind Sonida Senior Living and Aveanna Healthcare Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.