Correlation Between Sabra Healthcare and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Alta Equipment 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 Alta Equipment 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 Alta Equipment Group, you can compare the effects of market volatilities on Sabra Healthcare and Alta Equipment 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 Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Alta Equipment.
Diversification Opportunities for Sabra Healthcare and Alta Equipment
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sabra and Alta is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group 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 Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Alta Equipment go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Alta Equipment
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to under-perform the Alta Equipment. But the stock apears to be less risky and, when comparing its historical volatility, Sabra Healthcare REIT is 2.6 times less risky than Alta Equipment. The stock trades about -0.02 of its potential returns per unit of risk. The Alta Equipment Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 665.00 in Alta Equipment Group on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Alta Equipment Group or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Alta Equipment Group
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Alta Equipment Group |
Sabra Healthcare and Alta Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Alta Equipment
The main advantage of trading using opposite Sabra Healthcare and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's 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 |
| Alta Equipment vs. PROG Holdings | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Mega Matrix Corp | Alta Equipment vs. FTAI Aviation Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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