Correlation Between Sabra Health and GUARDANT HEALTH
Can any of the company-specific risk be diversified away by investing in both Sabra Health and GUARDANT HEALTH 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 GUARDANT HEALTH 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 GUARDANT HEALTH CL, you can compare the effects of market volatilities on Sabra Health and GUARDANT HEALTH 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 GUARDANT HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and GUARDANT HEALTH.
Diversification Opportunities for Sabra Health and GUARDANT HEALTH
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and GUARDANT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and GUARDANT HEALTH CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARDANT HEALTH CL 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 GUARDANT HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARDANT HEALTH CL has no effect on the direction of Sabra Health i.e., Sabra Health and GUARDANT HEALTH go up and down completely randomly.
Pair Corralation between Sabra Health and GUARDANT HEALTH
Assuming the 90 days horizon Sabra Health is expected to generate 1.18 times less return on investment than GUARDANT HEALTH. But when comparing it to its historical volatility, Sabra Health Care is 2.77 times less risky than GUARDANT HEALTH. It trades about 0.17 of its potential returns per unit of risk. GUARDANT HEALTH CL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,491 in GUARDANT HEALTH CL on September 1, 2024 and sell it today you would earn a total of 827.00 from holding GUARDANT HEALTH CL or generate 33.2% 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. GUARDANT HEALTH CL
Performance |
| Timeline |
| Sabra Health Care |
| GUARDANT HEALTH CL |
Sabra Health and GUARDANT HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and GUARDANT HEALTH
The main advantage of trading using opposite Sabra Health and GUARDANT HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, GUARDANT HEALTH 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 GUARDANT HEALTH will offset losses from the drop in GUARDANT HEALTH's long position.| Sabra Health vs. Hanison Construction Holdings | Sabra Health vs. UNITED UTILITIES GR | Sabra Health vs. NORTHEAST UTILITIES | Sabra Health vs. Hitachi Construction Machinery |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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