Correlation Between Sonida Senior and Entravision Communications

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

Diversification Opportunities for Sonida Senior and Entravision Communications

-0.23

Correlation Coefficient

Sonida Senior  Entravision Communications

Very good diversification

The 3 months correlation between Sonida and Entravision is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Sonida Senior i.e., Sonida Senior and Entravision Communications go up and down completely randomly.

Pair Corralation between Sonida Senior and Entravision Communications

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Entravision Communications. In addition to that, Sonida Senior is 1.07 times more volatile than Entravision Communications. It trades about -0.03 of its total potential returns per unit of risk. Entravision Communications is currently generating about 0.07 per unit of volatility. If you would invest  190.00  in Entravision Communications on September 27, 2024 and sell it today you would earn a total of  50.00  from holding Entravision Communications or generate 26.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Sonida Senior Living  vs.  Entravision Communications

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.

Entravision Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and Entravision Communications

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

The idea behind Sonida Senior Living and Entravision Communications 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.