Correlation Between Sonida Senior and MDJM

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

Diversification Opportunities for Sonida Senior and MDJM

-0.18

Correlation Coefficient

Sonida Senior  MDJM

Good diversification

The 3 months correlation between Sonida and MDJM is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Sonida Senior i.e., Sonida Senior and MDJM go up and down completely randomly.

Pair Corralation between Sonida Senior and MDJM

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.16 times more return on investment than MDJM. However, Sonida Senior Living is 6.06 times less risky than MDJM. It trades about 0.05 of its potential returns per unit of risk. MDJM is currently generating about 0.0 per unit of risk. If you would invest  2,322  in Sonida Senior Living on December 18, 2024 and sell it today you would earn a total of  126.00  from holding Sonida Senior Living or generate 5.43% return on investment over 90 days.

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

Sonida Senior Living  vs.  MDJM

Sonida Senior Living

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sonida Senior Living are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Sonida Senior may actually be approaching a critical reversion point that can send shares even higher in April 2025.

MDJM

Risk-Adjusted Performance

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, MDJM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sonida Senior and MDJM

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

The idea behind Sonida Senior Living and MDJM 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..