Correlation Between Sabra Health and Element Solutions
Can any of the company-specific risk be diversified away by investing in both Sabra Health and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on Sabra Health and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Element Solutions.
Diversification Opportunities for Sabra Health and Element Solutions
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Element is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of Sabra Health i.e., Sabra Health and Element Solutions go up and down completely randomly.
Pair Corralation between Sabra Health and Element Solutions
Assuming the 90 days horizon Sabra Health Care is expected to generate 0.8 times more return on investment than Element Solutions. However, Sabra Health Care is 1.26 times less risky than Element Solutions. It trades about -0.26 of its potential returns per unit of risk. Element Solutions is currently generating about -0.29 per unit of risk. If you would invest 1,740 in Sabra Health Care on September 22, 2024 and sell it today you would lose (120.00) from holding Sabra Health Care or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Health Care vs. Element Solutions
Performance |
| Timeline |
| Sabra Health Care |
| Element Solutions |
Sabra Health and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Health and Element Solutions
The main advantage of trading using opposite Sabra Health and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| Sabra Health vs. Welltower | Sabra Health vs. Superior Plus Corp | Sabra Health vs. NMI Holdings | Sabra Health vs. SIVERS SEMICONDUCTORS AB |
| Element Solutions vs. CVS Health | Element Solutions vs. Sabra Health Care | Element Solutions vs. Bumrungrad Hospital Public | Element Solutions vs. Datalogic SpA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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