Correlation Between Independence Realty and Sabra Healthcare
Can any of the company-specific risk be diversified away by investing in both Independence Realty 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 Independence Realty and Sabra Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Realty Trust and Sabra Healthcare REIT, you can compare the effects of market volatilities on Independence Realty 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 Independence Realty with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Realty and Sabra Healthcare.
Diversification Opportunities for Independence Realty and Sabra Healthcare
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Independence and Sabra is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty 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 Independence Realty 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 Independence Realty 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 Independence Realty i.e., Independence Realty and Sabra Healthcare go up and down completely randomly.
Pair Corralation between Independence Realty and Sabra Healthcare
Considering the 90-day investment horizon Independence Realty Trust is expected to generate 0.69 times more return on investment than Sabra Healthcare. However, Independence Realty Trust is 1.46 times less risky than Sabra Healthcare. It trades about 0.33 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.0 per unit of risk. If you would invest 1,978 in Independence Realty Trust on August 26, 2024 and sell it today you would earn a total of 197.00 from holding Independence Realty Trust or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Independence Realty Trust vs. Sabra Healthcare REIT
Performance |
| Timeline |
| Independence Realty Trust |
| Sabra Healthcare REIT |
Independence Realty and Sabra Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Realty and Sabra Healthcare
The main advantage of trading using opposite Independence Realty and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Realty 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.| Independence Realty vs. Essex Property Trust | Independence Realty vs. Mid America Apartment Communities | Independence Realty vs. Nexpoint Residential Trust |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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