Correlation Between Sabra Health and Air Lease
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Air Lease 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 Air Lease 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 Air Lease, you can compare the effects of market volatilities on Sabra Health and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Air Lease.
Diversification Opportunities for Sabra Health and Air Lease
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Air is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Sabra Health i.e., Sabra Health and Air Lease go up and down completely randomly.
Pair Corralation between Sabra Health and Air Lease
Assuming the 90 days horizon Sabra Health Care is expected to generate 0.97 times more return on investment than Air Lease. However, Sabra Health Care is 1.03 times less risky than Air Lease. It trades about 0.08 of its potential returns per unit of risk. Air Lease is currently generating about 0.04 per unit of risk. If you would invest 978.00 in Sabra Health Care on September 3, 2024 and sell it today you would earn a total of 803.00 from holding Sabra Health Care or generate 82.11% 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. Air Lease
Performance |
| Timeline |
| Sabra Health Care |
| Air Lease |
Sabra Health and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Air Lease
The main advantage of trading using opposite Sabra Health and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease'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 |
| Air Lease vs. Air Transport Services | Air Lease vs. VIRGIN WINES UK | Air Lease vs. TEXAS ROADHOUSE | Air Lease vs. Broadcom |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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