Correlation Between Sienna Senior and Lycos Energy
Can any of the company-specific risk be diversified away by investing in both Sienna Senior and Lycos Energy 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 Lycos Energy 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 Lycos Energy, you can compare the effects of market volatilities on Sienna Senior and Lycos Energy 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 Lycos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sienna Senior and Lycos Energy.
Diversification Opportunities for Sienna Senior and Lycos Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sienna and Lycos is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sienna Senior Living and Lycos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lycos Energy 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 Lycos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lycos Energy has no effect on the direction of Sienna Senior i.e., Sienna Senior and Lycos Energy go up and down completely randomly.
Pair Corralation between Sienna Senior and Lycos Energy
Assuming the 90 days trading horizon Sienna Senior Living is expected to generate 0.71 times more return on investment than Lycos Energy. However, Sienna Senior Living is 1.41 times less risky than Lycos Energy. It trades about 0.18 of its potential returns per unit of risk. Lycos Energy is currently generating about 0.05 per unit of risk. If you would invest 1,302 in Sienna Senior Living on February 28, 2024 and sell it today you would earn a total of 158.00 from holding Sienna Senior Living or generate 12.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sienna Senior Living vs. Lycos Energy
Performance |
Timeline |
Sienna Senior Living |
Lycos Energy |
Sienna Senior and Lycos Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sienna Senior and Lycos Energy
The main advantage of trading using opposite Sienna Senior and Lycos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sienna Senior position performs unexpectedly, Lycos Energy 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 Lycos Energy will offset losses from the drop in Lycos Energy's long position.Sienna Senior vs. Financial 15 Split | Sienna Senior vs. Rubicon Organics | Sienna Senior vs. Amazon CDR | Sienna Senior vs. BMO Long Corporate |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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