Correlation Between Sonida Senior and Axogen

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

Diversification Opportunities for Sonida Senior and Axogen

-0.41

Correlation Coefficient

Sonida Senior  Axogen

Very good diversification

The 3 months correlation between Sonida and Axogen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc 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 Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of Sonida Senior i.e., Sonida Senior and Axogen go up and down completely randomly.

Pair Corralation between Sonida Senior and Axogen

Given the investment horizon of 90 days Sonida Senior Living is expected to generate 0.69 times more return on investment than Axogen. However, Sonida Senior Living is 1.46 times less risky than Axogen. It trades about -0.15 of its potential returns per unit of risk. Axogen Inc is currently generating about -0.11 per unit of risk. If you would invest  2,558  in Sonida Senior Living on August 17, 2024 and sell it today you would lose (294.00) from holding Sonida Senior Living or give up 11.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sonida Senior Living  vs.  Axogen Inc

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 weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Axogen Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Axogen 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 Axogen

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

The idea behind Sonida Senior Living and Axogen Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.