Correlation Between LGI Homes and Sabra Health
Can any of the company-specific risk be diversified away by investing in both LGI Homes 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 LGI Homes and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LGI Homes and Sabra Health Care, you can compare the effects of market volatilities on LGI Homes 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 LGI Homes with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Sabra Health.
Diversification Opportunities for LGI Homes and Sabra Health
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between LGI and Sabra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes 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 LGI Homes 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 LGI Homes 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 LGI Homes i.e., LGI Homes and Sabra Health go up and down completely randomly.
Pair Corralation between LGI Homes and Sabra Health
Assuming the 90 days horizon LGI Homes is expected to generate 1.72 times less return on investment than Sabra Health. In addition to that, LGI Homes is 1.91 times more volatile than Sabra Health Care. It trades about 0.05 of its total potential returns per unit of risk. Sabra Health Care is currently generating about 0.17 per unit of volatility. If you would invest 1,280 in Sabra Health Care on September 2, 2024 and sell it today you would earn a total of 501.00 from holding Sabra Health Care or generate 39.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Sabra Health Care
Performance |
| Timeline |
| LGI Homes |
| Sabra Health Care |
LGI Homes and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Sabra Health
The main advantage of trading using opposite LGI Homes and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI Homes 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.| LGI Homes vs. Singapore Telecommunications Limited | LGI Homes vs. HYDROFARM HLD GRP | LGI Homes vs. Sumitomo Mitsui Construction | LGI Homes vs. Chongqing Machinery Electric |
| Sabra Health vs. Medical Properties Trust | Sabra Health vs. LTC Properties | Sabra Health vs. The GEO Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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