Correlation Between Sabra Health and Northern Trust
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Northern Trust 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 Northern Trust 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 Northern Trust, you can compare the effects of market volatilities on Sabra Health and Northern Trust 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 Northern Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Northern Trust.
Diversification Opportunities for Sabra Health and Northern Trust
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sabra and Northern is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Northern Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Trust 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 Northern Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Trust has no effect on the direction of Sabra Health i.e., Sabra Health and Northern Trust go up and down completely randomly.
Pair Corralation between Sabra Health and Northern Trust
Assuming the 90 days horizon Sabra Health Care is expected to generate 0.95 times more return on investment than Northern Trust. However, Sabra Health Care is 1.05 times less risky than Northern Trust. It trades about 0.08 of its potential returns per unit of risk. Northern Trust is currently generating about 0.04 per unit of risk. If you would invest 975.00 in Sabra Health Care on September 1, 2024 and sell it today you would earn a total of 813.00 from holding Sabra Health Care or generate 83.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sabra Health Care vs. Northern Trust
Performance |
| Timeline |
| Sabra Health Care |
| Northern Trust |
Sabra Health and Northern Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Northern Trust
The main advantage of trading using opposite Sabra Health and Northern Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Northern Trust 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 Northern Trust will offset losses from the drop in Northern Trust's long position.| Sabra Health vs. Hanison Construction Holdings | Sabra Health vs. UNITED UTILITIES GR | Sabra Health vs. NORTHEAST UTILITIES | Sabra Health vs. Hitachi Construction Machinery |
| Northern Trust vs. YOOMA WELLNESS INC | Northern Trust vs. AOYAMA TRADING | Northern Trust vs. Sabra Health Care | Northern Trust vs. MGIC INVESTMENT |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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