Correlation Between Sabra Health and Ares Management
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Ares Management 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 Sabra Health and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabra Health Care and Ares Management Corp, you can compare the effects of market volatilities on Sabra Health and Ares Management 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 Sabra Health with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Ares Management.
Diversification Opportunities for Sabra Health and Ares Management
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and Ares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp and Sabra Health 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 Sabra Health Care are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Sabra Health i.e., Sabra Health and Ares Management go up and down completely randomly.
Pair Corralation between Sabra Health and Ares Management
Assuming the 90 days horizon Sabra Health Care is expected to under-perform the Ares Management. But the stock apears to be less risky and, when comparing its historical volatility, Sabra Health Care is 1.45 times less risky than Ares Management. The stock trades about -0.31 of its potential returns per unit of risk. The Ares Management Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 16,763 in Ares Management Corp on September 26, 2024 and sell it today you would earn a total of 167.00 from holding Ares Management Corp or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Ares Management Corp
Performance |
| Timeline |
| Sabra Health Care |
| Ares Management Corp |
Sabra Health and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Ares Management
The main advantage of trading using opposite Sabra Health and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Sabra Health vs. Compugroup Medical SE | Sabra Health vs. Japan Medical Dynamic | Sabra Health vs. CARSALESCOM | Sabra Health vs. Dairy Farm International |
| Ares Management vs. Grupo Carso SAB | Ares Management vs. MUTUIONLINE | Ares Management vs. CECO ENVIRONMENTAL | Ares Management vs. RELIANCE STEEL AL |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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