Correlation Between Sabra Health and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Aedas Homes 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 Aedas Homes 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 Aedas Homes SA, you can compare the effects of market volatilities on Sabra Health and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Aedas Homes.
Diversification Opportunities for Sabra Health and Aedas Homes
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sabra and Aedas is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Sabra Health i.e., Sabra Health and Aedas Homes go up and down completely randomly.
Pair Corralation between Sabra Health and Aedas Homes
Assuming the 90 days horizon Sabra Health is expected to generate 1.61 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, Sabra Health Care is 1.05 times less risky than Aedas Homes. It trades about 0.08 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Aedas Homes SA on September 12, 2024 and sell it today you would earn a total of 1,570 from holding Aedas Homes SA or generate 167.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Aedas Homes SA
Performance |
| Timeline |
| Sabra Health Care |
| Aedas Homes SA |
Sabra Health and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Aedas Homes
The main advantage of trading using opposite Sabra Health and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Sabra Health vs. Welltower | Sabra Health vs. Superior Plus Corp | Sabra Health vs. NMI Holdings | Sabra Health vs. SIVERS SEMICONDUCTORS AB |
| Aedas Homes vs. Penn National Gaming | Aedas Homes vs. DiamondRock Hospitality | Aedas Homes vs. Sabra Health Care | Aedas Homes vs. PENN NATL GAMING |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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