Correlation Between Sonida Senior and Black Hills

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

Diversification Opportunities for Sonida Senior and Black Hills

-0.12

Correlation Coefficient

Sonida Senior  Black Hills

Good diversification

The 3 months correlation between Sonida and Black is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Sonida Senior i.e., Sonida Senior and Black Hills go up and down completely randomly.

Pair Corralation between Sonida Senior and Black Hills

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 2.86 times more return on investment than Black Hills. However, Sonida Senior is 2.86 times more volatile than Black Hills. It trades about 0.29 of its potential returns per unit of risk. Black Hills is currently generating about -0.18 per unit of risk. If you would invest  2,153  in Sonida Senior Living on September 17, 2024 and sell it today you would earn a total of  330.00  from holding Sonida Senior Living or generate 15.33% 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.  Black Hills

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.

Black Hills

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sonida Senior and Black Hills

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

The idea behind Sonida Senior Living and Black Hills 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.