Correlation Between Modine Manufacturing and Sabra Healthcare
Can any of the company-specific risk be diversified away by investing in both Modine Manufacturing 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 Modine Manufacturing and Sabra Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modine Manufacturing and Sabra Healthcare REIT, you can compare the effects of market volatilities on Modine Manufacturing 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 Modine Manufacturing with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Sabra Healthcare.
Diversification Opportunities for Modine Manufacturing and Sabra Healthcare
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Modine and Sabra is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing i.e., Modine Manufacturing and Sabra Healthcare go up and down completely randomly.
Pair Corralation between Modine Manufacturing and Sabra Healthcare
Considering the 90-day investment horizon Modine Manufacturing is expected to generate 2.5 times more return on investment than Sabra Healthcare. However, Modine Manufacturing is 2.5 times more volatile than Sabra Healthcare REIT. It trades about 0.12 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.14 per unit of risk. If you would invest 9,781 in Modine Manufacturing on September 4, 2024 and sell it today you would earn a total of 3,993 from holding Modine Manufacturing or generate 40.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modine Manufacturing vs. Sabra Healthcare REIT
Performance |
| Timeline |
| Modine Manufacturing |
| Sabra Healthcare REIT |
Modine Manufacturing and Sabra Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modine Manufacturing and Sabra Healthcare
The main advantage of trading using opposite Modine Manufacturing and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modine Manufacturing 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.| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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