Correlation Between Sabra Health and GEO
Can any of the company-specific risk be diversified away by investing in both Sabra Health and GEO 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 GEO 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 The GEO Group, you can compare the effects of market volatilities on Sabra Health and GEO 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 GEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and GEO.
Diversification Opportunities for Sabra Health and GEO
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and GEO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and The GEO Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEO Group 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 GEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEO Group has no effect on the direction of Sabra Health i.e., Sabra Health and GEO go up and down completely randomly.
Pair Corralation between Sabra Health and GEO
Assuming the 90 days horizon Sabra Health is expected to generate 1.88 times less return on investment than GEO. But when comparing it to its historical volatility, Sabra Health Care is 1.99 times less risky than GEO. It trades about 0.07 of its potential returns per unit of risk. The GEO Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,126 in The GEO Group on August 25, 2024 and sell it today you would earn a total of 1,616 from holding The GEO Group or generate 143.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. The GEO Group
Performance |
| Timeline |
| Sabra Health Care |
| GEO Group |
Sabra Health and GEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and GEO
The main advantage of trading using opposite Sabra Health and GEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, GEO 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 GEO will offset losses from the drop in GEO's long position.| Sabra Health vs. Welltower | Sabra Health vs. Medical Properties Trust | Sabra Health vs. National Health Investors | Sabra Health vs. The GEO Group |
| GEO vs. Welltower | GEO vs. Medical Properties Trust | GEO vs. Sabra Health Care | GEO vs. National Health Investors |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |