Correlation Between Sabra Healthcare and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Analog Devices 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 Healthcare and Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabra Healthcare REIT and Analog Devices, you can compare the effects of market volatilities on Sabra Healthcare and Analog Devices 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 Healthcare with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Analog Devices.
Diversification Opportunities for Sabra Healthcare and Analog Devices
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabra and Analog is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Sabra Healthcare 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 Healthcare REIT are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Analog Devices go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Analog Devices
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 1.05 times more return on investment than Analog Devices. However, Sabra Healthcare is 1.05 times more volatile than Analog Devices. It trades about -0.04 of its potential returns per unit of risk. Analog Devices is currently generating about -0.17 per unit of risk. If you would invest 1,876 in Sabra Healthcare REIT on August 27, 2024 and sell it today you would lose (35.00) from holding Sabra Healthcare REIT or give up 1.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Analog Devices
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Analog Devices |
Sabra Healthcare and Analog Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Analog Devices
The main advantage of trading using opposite Sabra Healthcare and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.| Sabra Healthcare vs. Healthcare Realty Trust | Sabra Healthcare vs. Healthpeak Properties | Sabra Healthcare vs. Community Healthcare Trust | Sabra Healthcare vs. Universal Health Realty |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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