Correlation Between Sabra Health and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on Sabra Health and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Berkshire Hathaway.
Diversification Opportunities for Sabra Health and Berkshire Hathaway
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sabra and Berkshire is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Sabra Health i.e., Sabra Health and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Sabra Health and Berkshire Hathaway
Assuming the 90 days horizon Sabra Health is expected to generate 16.39 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Sabra Health Care is 35.31 times less risky than Berkshire Hathaway. It trades about 0.12 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 47,250,000 in Berkshire Hathaway on September 3, 2024 and sell it today you would earn a total of 20,900,000 from holding Berkshire Hathaway or generate 44.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Berkshire Hathaway
Performance |
| Timeline |
| Sabra Health Care |
| Berkshire Hathaway |
Sabra Health and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Berkshire Hathaway
The main advantage of trading using opposite Sabra Health and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway'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 |
| Berkshire Hathaway vs. Sabra Health Care | Berkshire Hathaway vs. EPSILON HEALTHCARE LTD | Berkshire Hathaway vs. GOODYEAR T RUBBER | Berkshire Hathaway vs. FEMALE HEALTH |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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