Correlation Between Sonida Senior and FREEPORT

Can any of the company-specific risk be diversified away by investing in both Sonida Senior and FREEPORT 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 FREEPORT 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 FREEPORT MCMORAN INC 4375, you can compare the effects of market volatilities on Sonida Senior and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and FREEPORT.

Diversification Opportunities for Sonida Senior and FREEPORT

0.23

Correlation Coefficient

Sonida Senior  FREEPORT

Modest diversification

The 3 months correlation between Sonida and FREEPORT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and FREEPORT MCMORAN INC 4375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN INC 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of Sonida Senior i.e., Sonida Senior and FREEPORT go up and down completely randomly.

Pair Corralation between Sonida Senior and FREEPORT

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the FREEPORT. In addition to that, Sonida Senior is 4.47 times more volatile than FREEPORT MCMORAN INC 4375. It trades about -0.06 of its total potential returns per unit of risk. FREEPORT MCMORAN INC 4375 is currently generating about -0.14 per unit of volatility. If you would invest  9,938  in FREEPORT MCMORAN INC 4375 on September 20, 2024 and sell it today you would lose (620.00) from holding FREEPORT MCMORAN INC 4375 or give up 6.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Sonida Senior Living  vs.  FREEPORT MCMORAN INC 4375

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 conflicting performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 4375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sonida Senior and FREEPORT

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

The idea behind Sonida Senior Living and FREEPORT MCMORAN INC 4375 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.