Correlation Between Sable Offshore and Sonida Senior

Can any of the company-specific risk be diversified away by investing in both Sable Offshore and Sonida Senior 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 Sable Offshore and Sonida Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sable Offshore Corp and Sonida Senior Living, you can compare the effects of market volatilities on Sable Offshore and Sonida Senior 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 Sable Offshore with a short position of Sonida Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and Sonida Senior.

Diversification Opportunities for Sable Offshore and Sonida Senior

0.31

Correlation Coefficient

Sable Offshore  Sonida Senior

Weak diversification

The 3 months correlation between Sable and Sonida is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living and Sable Offshore 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 Sable Offshore Corp are associated (or correlated) with Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Sable Offshore i.e., Sable Offshore and Sonida Senior go up and down completely randomly.

Pair Corralation between Sable Offshore and Sonida Senior

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.57 times more return on investment than Sonida Senior. However, Sable Offshore is 1.57 times more volatile than Sonida Senior Living. It trades about 0.09 of its potential returns per unit of risk. Sonida Senior Living is currently generating about 0.01 per unit of risk. If you would invest  1,445  in Sable Offshore Corp on September 24, 2024 and sell it today you would earn a total of  782.00  from holding Sable Offshore Corp or generate 54.12% return on investment over 90 days.

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

Sable Offshore Corp  vs.  Sonida Senior Living

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Sable Offshore and Sonida Senior

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

The idea behind Sable Offshore Corp and Sonida Senior Living 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.