Correlation Between Alta Equipment and Sabra Healthcare
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Sabra Healthcare 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 Alta Equipment and Sabra Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta Equipment Group and Sabra Healthcare REIT, you can compare the effects of market volatilities on Alta Equipment and Sabra Healthcare 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 Alta Equipment with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Sabra Healthcare.
Diversification Opportunities for Alta Equipment and Sabra Healthcare
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alta and Sabra is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Sabra Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Healthcare REIT and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Sabra Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Healthcare REIT has no effect on the direction of Alta Equipment i.e., Alta Equipment and Sabra Healthcare go up and down completely randomly.
Pair Corralation between Alta Equipment and Sabra Healthcare
Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the Sabra Healthcare. In addition to that, Alta Equipment is 2.83 times more volatile than Sabra Healthcare REIT. It trades about -0.02 of its total potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.1 per unit of volatility. If you would invest 1,348 in Sabra Healthcare REIT on August 24, 2024 and sell it today you would earn a total of 493.00 from holding Sabra Healthcare REIT or generate 36.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Sabra Healthcare REIT
Performance |
| Timeline |
| Alta Equipment Group |
| Sabra Healthcare REIT |
Alta Equipment and Sabra Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Sabra Healthcare
The main advantage of trading using opposite Alta Equipment and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Sabra Healthcare 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 Sabra Healthcare will offset losses from the drop in Sabra Healthcare's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
| Sabra Healthcare vs. Healthcare Realty Trust | Sabra Healthcare vs. Welltower | Sabra Healthcare vs. Diversified Healthcare Trust | Sabra Healthcare vs. Healthpeak Properties |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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