Correlation Between Sonida Senior and VanEck Vectors

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

Diversification Opportunities for Sonida Senior and VanEck Vectors

0.1

Correlation Coefficient

Sonida Senior  VanEck Vectors

Average diversification

The 3 months correlation between Sonida and VanEck is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Sonida Senior i.e., Sonida Senior and VanEck Vectors go up and down completely randomly.

Pair Corralation between Sonida Senior and VanEck Vectors

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the VanEck Vectors. In addition to that, Sonida Senior is 10.55 times more volatile than VanEck Vectors ETF. It trades about -0.03 of its total potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.04 per unit of volatility. If you would invest  4,647  in VanEck Vectors ETF on September 4, 2024 and sell it today you would earn a total of  31.00  from holding VanEck Vectors ETF or generate 0.67% return on investment over 90 days.

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

Sonida Senior Living  vs.  VanEck Vectors ETF

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 weak 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.

VanEck Vectors ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, VanEck Vectors is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sonida Senior and VanEck Vectors

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

The idea behind Sonida Senior Living and VanEck Vectors ETF 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.