Correlation Between Sabra Health and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Sabra Health and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Dow Jones.
Diversification Opportunities for Sabra Health and Dow Jones
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Dow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sabra Health i.e., Sabra Health and Dow Jones go up and down completely randomly.
Pair Corralation between Sabra Health and Dow Jones
Assuming the 90 days horizon Sabra Health is expected to generate 5.94 times less return on investment than Dow Jones. In addition to that, Sabra Health is 2.04 times more volatile than Dow Jones Industrial. It trades about 0.02 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of volatility. If you would invest 4,223,305 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 248,901 from holding Dow Jones Industrial or generate 5.89% 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. Dow Jones Industrial
Performance |
| Timeline |
Sabra Health and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sabra Health Care
Pair trading matchups for Sabra Health
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sabra Health and Dow Jones
The main advantage of trading using opposite Sabra Health and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sabra Health vs. Superior Plus Corp | Sabra Health vs. NMI Holdings | Sabra Health vs. SIVERS SEMICONDUCTORS AB | Sabra Health vs. Talanx AG |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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