Correlation Between Sonida Senior and NikolaCorp

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Can any of the company-specific risk be diversified away by investing in both Sonida Senior and NikolaCorp 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 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

-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Sonida and NikolaCorp is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and NikolaCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NikolaCorp 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 NikolaCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NikolaCorp has no effect on the direction of Sonida Senior i.e., Sonida Senior and NikolaCorp go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sonida Senior Living  vs.  NikolaCorp

 Performance 
       Timeline  
Sonida Senior Living 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sonida Senior Living are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Sonida Senior sustained solid returns over the last few months and may actually be approaching a breakup point.
NikolaCorp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days NikolaCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in March 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sonida Senior and NikolaCorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sonida Senior and NikolaCorp

The 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.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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