Correlation Between Sonida Senior and NextTrip

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

Diversification Opportunities for Sonida Senior and NextTrip

-0.58

Correlation Coefficient

Sonida Senior  NextTrip

Excellent diversification

The 3 months correlation between Sonida and NextTrip is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip 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 NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Sonida Senior i.e., Sonida Senior and NextTrip go up and down completely randomly.

Pair Corralation between Sonida Senior and NextTrip

Given the investment horizon of 90 days Sonida Senior is expected to generate 1.33 times less return on investment than NextTrip. But when comparing it to its historical volatility, Sonida Senior Living is 3.43 times less risky than NextTrip. It trades about 0.03 of its potential returns per unit of risk. NextTrip is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  632.00  in NextTrip on December 29, 2024 and sell it today you would lose (79.00) from holding NextTrip or give up 12.5% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  NextTrip

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 2 (%) 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.

NextTrip

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextTrip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NextTrip is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sonida Senior and NextTrip

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

The idea behind Sonida Senior Living and NextTrip 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.