Correlation Between IMPERIAL TOBACCO and Sabra Health
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Sabra Health Care, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Sabra Health.
Diversification Opportunities for IMPERIAL TOBACCO and Sabra Health
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IMPERIAL and Sabra is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Sabra Health go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Sabra Health
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 1.04 times more return on investment than Sabra Health. However, IMPERIAL TOBACCO is 1.04 times more volatile than Sabra Health Care. It trades about 0.55 of its potential returns per unit of risk. Sabra Health Care is currently generating about -0.24 per unit of risk. If you would invest 2,757 in IMPERIAL TOBACCO on September 14, 2024 and sell it today you would earn a total of 375.00 from holding IMPERIAL TOBACCO or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Sabra Health Care
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Sabra Health Care |
IMPERIAL TOBACCO and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Sabra Health
The main advantage of trading using opposite IMPERIAL TOBACCO and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc |
| Sabra Health vs. The Yokohama Rubber | Sabra Health vs. IMPERIAL TOBACCO | Sabra Health vs. VULCAN MATERIALS | Sabra Health vs. JAPAN TOBACCO UNSPADR12 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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