Correlation Between Sabra Health and New Residential
Can any of the company-specific risk be diversified away by investing in both Sabra Health and New Residential 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 New Residential 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 New Residential Investment, you can compare the effects of market volatilities on Sabra Health and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and New Residential.
Diversification Opportunities for Sabra Health and New Residential
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and New is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Sabra Health i.e., Sabra Health and New Residential go up and down completely randomly.
Pair Corralation between Sabra Health and New Residential
Assuming the 90 days horizon Sabra Health Care is expected to under-perform the New Residential. In addition to that, Sabra Health is 1.37 times more volatile than New Residential Investment. It trades about -0.32 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.26 per unit of volatility. If you would invest 1,006 in New Residential Investment on September 13, 2024 and sell it today you would earn a total of 55.00 from holding New Residential Investment or generate 5.47% 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. New Residential Investment
Performance |
| Timeline |
| Sabra Health Care |
| New Residential Inve |
Sabra Health and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and New Residential
The main advantage of trading using opposite Sabra Health and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Sabra Health vs. The Yokohama Rubber | Sabra Health vs. IMPERIAL TOBACCO | Sabra Health vs. VULCAN MATERIALS | Sabra Health vs. JAPAN TOBACCO UNSPADR12 |
| New Residential vs. ATRYS HEALTH SA | New Residential vs. EHEALTH | New Residential vs. Natural Health Trends | New Residential vs. National Beverage Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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