Correlation Between Extendicare and Sienna Senior

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

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

Diversification Opportunities for Extendicare and Sienna Senior

0.23

Correlation Coefficient

Extendicare  Sienna Senior

Modest diversification

The 3 months correlation between Extendicare and Sienna is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Extendicare and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and Extendicare 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 Extendicare are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Extendicare i.e., Extendicare and Sienna Senior go up and down completely randomly.

Pair Corralation between Extendicare and Sienna Senior

Assuming the 90 days trading horizon Extendicare is expected to generate 24.09 times less return on investment than Sienna Senior. In addition to that, Extendicare is 1.98 times more volatile than Sienna Senior Living. It trades about 0.01 of its total potential returns per unit of risk. Sienna Senior Living is currently generating about 0.27 per unit of volatility. If you would invest  1,624  in Sienna Senior Living on April 22, 2025 and sell it today you would earn a total of  242.00  from holding Sienna Senior Living or generate 14.9% return on investment over 90 days.

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

Extendicare  vs.  Sienna Senior Living

Extendicare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Extendicare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Extendicare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sienna Senior Living

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sienna Senior Living are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sienna Senior displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Extendicare and Sienna Senior

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

The idea behind Extendicare and Sienna Senior Living 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.