Correlation Between CubeSmart and Sabra Healthcare
Can any of the company-specific risk be diversified away by investing in both CubeSmart 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 CubeSmart and Sabra Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CubeSmart and Sabra Healthcare REIT, you can compare the effects of market volatilities on CubeSmart 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 CubeSmart with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CubeSmart and Sabra Healthcare.
Diversification Opportunities for CubeSmart and Sabra Healthcare
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CubeSmart and Sabra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CubeSmart 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 CubeSmart 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 CubeSmart 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 CubeSmart i.e., CubeSmart and Sabra Healthcare go up and down completely randomly.
Pair Corralation between CubeSmart and Sabra Healthcare
Given the investment horizon of 90 days CubeSmart is expected to generate 0.85 times more return on investment than Sabra Healthcare. However, CubeSmart is 1.18 times less risky than Sabra Healthcare. It trades about 0.06 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about -0.04 per unit of risk. If you would invest 4,801 in CubeSmart on August 27, 2024 and sell it today you would earn a total of 90.00 from holding CubeSmart or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CubeSmart vs. Sabra Healthcare REIT
Performance |
| Timeline |
| CubeSmart |
| Sabra Healthcare REIT |
CubeSmart and Sabra Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CubeSmart and Sabra Healthcare
The main advantage of trading using opposite CubeSmart and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CubeSmart 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.| CubeSmart vs. Public Storage | CubeSmart vs. National Storage Affiliates | CubeSmart vs. Prologis | CubeSmart vs. Extra Space Storage |
| Sabra Healthcare vs. Healthcare Realty Trust | Sabra Healthcare vs. Healthpeak Properties | Sabra Healthcare vs. Community Healthcare Trust | Sabra Healthcare vs. Universal Health Realty |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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