Correlation Between Sonida Senior and Varca Ventures

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

Diversification Opportunities for Sonida Senior and Varca Ventures

0.0

Correlation Coefficient

Sonida Senior  Varca Ventures

Pay attention - limited upside

The 3 months correlation between Sonida and Varca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Varca Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varca Ventures 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 Varca Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varca Ventures has no effect on the direction of Sonida Senior i.e., Sonida Senior and Varca Ventures go up and down completely randomly.

Pair Corralation between Sonida Senior and Varca Ventures

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.99 times more return on investment than Varca Ventures. However, Sonida Senior Living is 1.01 times less risky than Varca Ventures. It trades about 0.05 of its potential returns per unit of risk. Varca Ventures is currently generating about 0.02 per unit of risk. If you would invest  1,416  in Sonida Senior Living on September 4, 2024 and sell it today you would earn a total of  1,146  from holding Sonida Senior Living or generate 80.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sonida Senior Living  vs.  Varca Ventures

Sonida Senior Living

Risk-Adjusted Performance

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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 weak 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.

Varca Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varca Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Varca Ventures is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sonida Senior and Varca Ventures

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

The idea behind Sonida Senior Living and Varca Ventures 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.