Correlation Between Sonida Senior and Park Hotels

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

Diversification Opportunities for Sonida Senior and Park Hotels

0.0

Correlation Coefficient

Sonida Senior  Park Hotels

Pay attention - limited upside

The 3 months correlation between Sonida and Park is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Sonida Senior i.e., Sonida Senior and Park Hotels go up and down completely randomly.

Pair Corralation between Sonida Senior and Park Hotels

Given the investment horizon of 90 days Sonida Senior is expected to generate 1.63 times less return on investment than Park Hotels. In addition to that, Sonida Senior is 1.9 times more volatile than Park Hotels Resorts. It trades about 0.01 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.03 per unit of volatility. If you would invest  1,422  in Park Hotels Resorts on September 24, 2024 and sell it today you would earn a total of  63.00  from holding Park Hotels Resorts or generate 4.43% return on investment over 90 days.

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

Sonida Senior Living  vs.  Park Hotels Resorts

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.

Park Hotels Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Hotels Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Park Hotels is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sonida Senior and Park Hotels

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

The idea behind Sonida Senior Living and Park Hotels Resorts 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.