Correlation Between Sonida Senior and Apogee Enterprises

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

Diversification Opportunities for Sonida Senior and Apogee Enterprises

-0.44

Correlation Coefficient

Sonida Senior  Apogee Enterprises

Very good diversification

The 3 months correlation between Sonida and Apogee is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises 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 Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Sonida Senior i.e., Sonida Senior and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Sonida Senior and Apogee Enterprises

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Apogee Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, Sonida Senior Living is 1.09 times less risky than Apogee Enterprises. The stock trades about -0.01 of its potential returns per unit of risk. The Apogee Enterprises is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,666  in Apogee Enterprises on September 15, 2024 and sell it today you would earn a total of  1,014  from holding Apogee Enterprises or generate 15.21% return on investment over 90 days.

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

Sonida Senior Living  vs.  Apogee Enterprises

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 somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Apogee Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sonida Senior and Apogee Enterprises

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

The idea behind Sonida Senior Living and Apogee Enterprises 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.