Correlation Between Sonida Senior and Brunswick

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

Diversification Opportunities for Sonida Senior and Brunswick

0.18

Correlation Coefficient

Sonida Senior  Brunswick

Average diversification

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

Pair Corralation between Sonida Senior and Brunswick

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Brunswick. In addition to that, Sonida Senior is 1.56 times more volatile than Brunswick. It trades about -0.03 of its total potential returns per unit of risk. Brunswick is currently generating about -0.02 per unit of volatility. If you would invest  7,873  in Brunswick on September 13, 2024 and sell it today you would lose (292.00) from holding Brunswick or give up 3.71% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  Brunswick

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.

Brunswick

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Sonida Senior and Brunswick

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

The idea behind Sonida Senior Living and Brunswick 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.