Correlation Between Sabra Health and Fair Isaac
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Fair Isaac 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 Fair Isaac 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 Fair Isaac Corp, you can compare the effects of market volatilities on Sabra Health and Fair Isaac 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 Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Fair Isaac.
Diversification Opportunities for Sabra Health and Fair Isaac
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sabra and Fair is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp 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 Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of Sabra Health i.e., Sabra Health and Fair Isaac go up and down completely randomly.
Pair Corralation between Sabra Health and Fair Isaac
Assuming the 90 days horizon Sabra Health is expected to generate 2.02 times less return on investment than Fair Isaac. But when comparing it to its historical volatility, Sabra Health Care is 1.22 times less risky than Fair Isaac. It trades about 0.16 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 121,250 in Fair Isaac Corp on September 3, 2024 and sell it today you would earn a total of 105,750 from holding Fair Isaac Corp or generate 87.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Fair Isaac Corp
Performance |
| Timeline |
| Sabra Health Care |
| Fair Isaac Corp |
Sabra Health and Fair Isaac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Fair Isaac
The main advantage of trading using opposite Sabra Health and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Fair Isaac 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 Fair Isaac will offset losses from the drop in Fair Isaac'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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