Correlation Between GAMESTOP and Sabra Health
Can any of the company-specific risk be diversified away by investing in both GAMESTOP and Sabra Health 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 GAMESTOP and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GAMESTOP and Sabra Health Care, you can compare the effects of market volatilities on GAMESTOP and Sabra Health 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 GAMESTOP with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GAMESTOP and Sabra Health.
Diversification Opportunities for GAMESTOP and Sabra Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GAMESTOP and Sabra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GAMESTOP and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care and GAMESTOP 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 GAMESTOP are associated (or correlated) with Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of GAMESTOP i.e., GAMESTOP and Sabra Health go up and down completely randomly.
Pair Corralation between GAMESTOP and Sabra Health
Assuming the 90 days trading horizon GAMESTOP is expected to generate 2.4 times more return on investment than Sabra Health. However, GAMESTOP is 2.4 times more volatile than Sabra Health Care. It trades about 0.28 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.16 per unit of risk. If you would invest 2,047 in GAMESTOP on September 4, 2024 and sell it today you would earn a total of 553.00 from holding GAMESTOP or generate 27.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GAMESTOP vs. Sabra Health Care
Performance |
| Timeline |
| GAMESTOP |
| Sabra Health Care |
GAMESTOP and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GAMESTOP and Sabra Health
The main advantage of trading using opposite GAMESTOP and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMESTOP position performs unexpectedly, Sabra Health 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 Health will offset losses from the drop in Sabra Health's long position.The idea behind GAMESTOP and Sabra Health Care 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.| Sabra Health vs. Welltower | Sabra Health vs. Omega Healthcare Investors | Sabra Health vs. Medical Properties Trust | Sabra Health vs. National Health Investors |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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