Correlation Between JAPAN TOBACCO and Sabra Health
Can any of the company-specific risk be diversified away by investing in both JAPAN 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 JAPAN 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 JAPAN TOBACCO UNSPADR12 and Sabra Health Care, you can compare the effects of market volatilities on JAPAN 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 JAPAN TOBACCO with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN TOBACCO and Sabra Health.
Diversification Opportunities for JAPAN TOBACCO and Sabra Health
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JAPAN and Sabra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN TOBACCO UNSPADR12 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 JAPAN 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 JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO i.e., JAPAN TOBACCO and Sabra Health go up and down completely randomly.
Pair Corralation between JAPAN TOBACCO and Sabra Health
Assuming the 90 days trading horizon JAPAN TOBACCO UNSPADR12 is expected to generate 1.42 times more return on investment than Sabra Health. However, JAPAN TOBACCO is 1.42 times more volatile than Sabra Health Care. It trades about 0.16 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 1,200 in JAPAN TOBACCO UNSPADR12 on September 14, 2024 and sell it today you would earn a total of 60.00 from holding JAPAN TOBACCO UNSPADR12 or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPAN TOBACCO UNSPADR12 vs. Sabra Health Care
Performance |
| Timeline |
| JAPAN TOBACCO UNSPADR12 |
| Sabra Health Care |
JAPAN TOBACCO and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN TOBACCO and Sabra Health
The main advantage of trading using opposite JAPAN TOBACCO and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN 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.| JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. British American Tobacco | JAPAN TOBACCO vs. Japan Tobacco |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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