Correlation Between Sabra Healthcare and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Aegon NV 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 Aegon NV 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 Aegon NV ADR, you can compare the effects of market volatilities on Sabra Healthcare and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Aegon NV.
Diversification Opportunities for Sabra Healthcare and Aegon NV
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Aegon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Aegon NV go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Aegon NV
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 0.98 times more return on investment than Aegon NV. However, Sabra Healthcare REIT is 1.02 times less risky than Aegon NV. It trades about 0.11 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.09 per unit of risk. If you would invest 1,265 in Sabra Healthcare REIT on September 1, 2024 and sell it today you would earn a total of 608.00 from holding Sabra Healthcare REIT or generate 48.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Aegon NV ADR
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Aegon NV ADR |
Sabra Healthcare and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Aegon NV
The main advantage of trading using opposite Sabra Healthcare and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Sabra Healthcare vs. Douglas Emmett | Sabra Healthcare vs. Alexandria Real Estate | Sabra Healthcare vs. Vornado Realty Trust | Sabra Healthcare vs. Highwoods Properties |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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