diversifiable risk of combining Sonida Senior and NikolaCorp 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 NikolaCorp, you can compare the effects of market volatilities on Sonida Senior and NikolaCorp 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 NikolaCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and NikolaCorp.
Diversification Opportunities for Sonida Senior and NikolaCorp
Pair Corralation between Sonida Senior and NikolaCorp
Given the investment horizon of 90 days Sonida Senior Living is expected to generate 1.26 times more return on investment than NikolaCorp. However, Sonida Senior is 1.26 times more volatile than NikolaCorp. It trades about 0.26 of its potential returns per unit of risk. NikolaCorp is currently generating about 0.09 per unit of risk. If you would invest 885.00 in Sonida Senior Living on November 24, 2023 and sell it today you would earn a total of 325.00 from holding Sonida Senior Living or generate 36.72% return on investment over 90 days.
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Sonida Senior Living vs. NikolaCorp
Sonida Senior and NikolaCorp Volatility Contrast
Pair Trading with Sonida Senior and NikolaCorpThe main advantage of trading using opposite Sonida Senior and NikolaCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior position performs unexpectedly, NikolaCorp 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 NikolaCorp will offset losses from the drop in NikolaCorp's long position. The idea behind Sonida Senior Living and NikolaCorp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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