Correlation Between Sabra Health and American Airlines
Can any of the company-specific risk be diversified away by investing in both Sabra Health and American Airlines 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 American Airlines 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 American Airlines Group, you can compare the effects of market volatilities on Sabra Health and American Airlines 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and American Airlines.
Diversification Opportunities for Sabra Health and American Airlines
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sabra and American is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Sabra Health i.e., Sabra Health and American Airlines go up and down completely randomly.
Pair Corralation between Sabra Health and American Airlines
Assuming the 90 days horizon Sabra Health Care is expected to generate 1.15 times more return on investment than American Airlines. However, Sabra Health is 1.15 times more volatile than American Airlines Group. It trades about -0.05 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.38 per unit of risk. If you would invest 1,540 in Sabra Health Care on November 28, 2024 and sell it today you would lose (41.00) from holding Sabra Health Care or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. American Airlines Group
Performance |
| Timeline |
| Sabra Health Care |
| American Airlines |
Sabra Health and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and American Airlines
The main advantage of trading using opposite Sabra Health and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Sabra Health vs. MAGIC SOFTWARE ENTR | Sabra Health vs. United Overseas Insurance | Sabra Health vs. Take Two Interactive Software | Sabra Health vs. Check Point Software |
| American Airlines vs. SMA Solar Technology | American Airlines vs. Computer And Technologies | American Airlines vs. Check Point Software | American Airlines vs. The Hanover Insurance |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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