Correlation Between Sienna Senior and HealWELL

Can any of the company-specific risk be diversified away by investing in both Sienna Senior and HealWELL 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 Sienna Senior and HealWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sienna Senior Living and HealWELL AI, you can compare the effects of market volatilities on Sienna Senior and HealWELL 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 Sienna Senior with a short position of HealWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Senior and HealWELL.

Diversification Opportunities for Sienna Senior and HealWELL

0.5

Correlation Coefficient

Sienna Senior  HealWELL

Very weak diversification

The 3 months correlation between Sienna and HealWELL is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and HealWELL AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealWELL AI and Sienna 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 Sienna Senior Living are associated (or correlated) with HealWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealWELL AI has no effect on the direction of Sienna Senior i.e., Sienna Senior and HealWELL go up and down completely randomly.

Pair Corralation between Sienna Senior and HealWELL

Assuming the 90 days trading horizon Sienna Senior is expected to generate 8.18 times less return on investment than HealWELL. But when comparing it to its historical volatility, Sienna Senior Living is 6.93 times less risky than HealWELL. It trades about 0.04 of its potential returns per unit of risk. HealWELL AI is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  124.00  in HealWELL AI on February 24, 2024 and sell it today you would earn a total of  44.00  from holding HealWELL AI or generate 35.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sienna Senior Living  vs.  HealWELL AI

Sienna Senior Living

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Senior Living are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Sienna Senior may actually be approaching a critical reversion point that can send shares even higher in June 2024.

HealWELL AI

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HealWELL AI are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, HealWELL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sienna Senior and HealWELL

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

The idea behind Sienna Senior Living and HealWELL AI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.