Correlation Between Sabra Health and Visa
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Visa 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 Visa 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 Visa Inc, you can compare the effects of market volatilities on Sabra Health and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Visa.
Diversification Opportunities for Sabra Health and Visa
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Visa is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Sabra Health i.e., Sabra Health and Visa go up and down completely randomly.
Pair Corralation between Sabra Health and Visa
Assuming the 90 days horizon Sabra Health is expected to generate 1.0 times less return on investment than Visa. In addition to that, Sabra Health is 1.23 times more volatile than Visa Inc. It trades about 0.16 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.19 per unit of volatility. If you would invest 25,159 in Visa Inc on September 3, 2024 and sell it today you would earn a total of 4,781 from holding Visa Inc or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Visa Inc
Performance |
| Timeline |
| Sabra Health Care |
| Visa Inc |
Sabra Health and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Visa
The main advantage of trading using opposite Sabra Health and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| Sabra Health vs. THAI BEVERAGE | Sabra Health vs. Lifeway Foods | Sabra Health vs. Cal Maine Foods | Sabra Health vs. SENECA FOODS A |
| Visa vs. Sabra Health Care | Visa vs. TYSON FOODS A | Visa vs. FEMALE HEALTH | Visa vs. Diamondrock Hospitality Co |
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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