Correlation Between Sabra Health and Welltower
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Welltower 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 Welltower 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 Welltower, you can compare the effects of market volatilities on Sabra Health and Welltower 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 Welltower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Welltower.
Diversification Opportunities for Sabra Health and Welltower
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Welltower is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Welltower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welltower 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 Welltower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welltower has no effect on the direction of Sabra Health i.e., Sabra Health and Welltower go up and down completely randomly.
Pair Corralation between Sabra Health and Welltower
Assuming the 90 days horizon Sabra Health is expected to generate 1.33 times less return on investment than Welltower. In addition to that, Sabra Health is 1.28 times more volatile than Welltower. It trades about 0.1 of its total potential returns per unit of risk. Welltower is currently generating about 0.18 per unit of volatility. If you would invest 8,069 in Welltower on August 29, 2024 and sell it today you would earn a total of 5,146 from holding Welltower or generate 63.77% 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. Welltower
Performance |
| Timeline |
| Sabra Health Care |
| Welltower |
Sabra Health and Welltower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Welltower
The main advantage of trading using opposite Sabra Health and Welltower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Welltower 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 Welltower will offset losses from the drop in Welltower's long position.| Sabra Health vs. Superior Plus Corp | Sabra Health vs. NMI Holdings | Sabra Health vs. SIVERS SEMICONDUCTORS AB | Sabra Health vs. Talanx AG |
| Welltower vs. Retail Estates NV | Welltower vs. COSTCO WHOLESALE CDR | Welltower vs. Ross Stores | Welltower vs. SALESFORCE INC CDR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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