Correlation Between Diversified Healthcare and Sabra Healthcare
Can any of the company-specific risk be diversified away by investing in both Diversified Healthcare 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 Diversified Healthcare and Sabra Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified Healthcare Trust and Sabra Healthcare REIT, you can compare the effects of market volatilities on Diversified Healthcare 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 Diversified Healthcare with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified Healthcare and Sabra Healthcare.
Diversification Opportunities for Diversified Healthcare and Sabra Healthcare
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diversified and Sabra is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Diversified Healthcare Trust 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 Diversified Healthcare 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 Diversified Healthcare Trust 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 Diversified Healthcare i.e., Diversified Healthcare and Sabra Healthcare go up and down completely randomly.
Pair Corralation between Diversified Healthcare and Sabra Healthcare
Considering the 90-day investment horizon Diversified Healthcare Trust is expected to generate 3.65 times more return on investment than Sabra Healthcare. However, Diversified Healthcare is 3.65 times more volatile than Sabra Healthcare REIT. It trades about 0.07 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.08 per unit of risk. If you would invest 76.00 in Diversified Healthcare Trust on August 28, 2024 and sell it today you would earn a total of 184.00 from holding Diversified Healthcare Trust or generate 242.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diversified Healthcare Trust vs. Sabra Healthcare REIT
Performance |
| Timeline |
| Diversified Healthcare |
| Sabra Healthcare REIT |
Diversified Healthcare and Sabra Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified Healthcare and Sabra Healthcare
The main advantage of trading using opposite Diversified Healthcare and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified Healthcare 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.| Diversified Healthcare vs. Global Medical REIT | Diversified Healthcare vs. Healthpeak Properties | Diversified Healthcare vs. Ventas Inc | Diversified Healthcare vs. National Health Investors |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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