Correlation Between Sabra Health and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Sabra Health and NAKED WINES 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 NAKED WINES 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 NAKED WINES PLC, you can compare the effects of market volatilities on Sabra Health and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and NAKED WINES.
Diversification Opportunities for Sabra Health and NAKED WINES
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sabra and NAKED is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Sabra Health i.e., Sabra Health and NAKED WINES go up and down completely randomly.
Pair Corralation between Sabra Health and NAKED WINES
Assuming the 90 days horizon Sabra Health Care is expected to generate 0.45 times more return on investment than NAKED WINES. However, Sabra Health Care is 2.24 times less risky than NAKED WINES. It trades about 0.13 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.03 per unit of risk. If you would invest 1,294 in Sabra Health Care on September 19, 2024 and sell it today you would earn a total of 362.00 from holding Sabra Health Care or generate 27.98% 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. NAKED WINES PLC
Performance |
| Timeline |
| Sabra Health Care |
| NAKED WINES PLC |
Sabra Health and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and NAKED WINES
The main advantage of trading using opposite Sabra Health and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| Sabra Health vs. Welltower | Sabra Health vs. Superior Plus Corp | Sabra Health vs. NMI Holdings | Sabra Health vs. SIVERS SEMICONDUCTORS AB |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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