Correlation Between Sonida Senior and Yum Brands

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

Diversification Opportunities for Sonida Senior and Yum Brands

0.0

Correlation Coefficient

Sonida Senior  Yum Brands

Pay attention - limited upside

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

Pair Corralation between Sonida Senior and Yum Brands

Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the Yum Brands. In addition to that, Sonida Senior is 2.24 times more volatile than Yum Brands. It trades about -0.17 of its total potential returns per unit of risk. Yum Brands is currently generating about -0.04 per unit of volatility. If you would invest  13,639  in Yum Brands on September 25, 2024 and sell it today you would lose (139.00) from holding Yum Brands or give up 1.02% of portfolio value over 90 days.

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

Sonida Senior Living  vs.  Yum Brands

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.

Yum Brands

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yum Brands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Yum Brands is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sonida Senior and Yum Brands

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

The idea behind Sonida Senior Living and Yum Brands 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.