Correlation Between Sabra Healthcare and Community Healthcare
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Community Healthcare 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 Community Healthcare 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 Community Healthcare Trust, you can compare the effects of market volatilities on Sabra Healthcare and Community Healthcare 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 Community Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Community Healthcare.
Diversification Opportunities for Sabra Healthcare and Community Healthcare
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabra and Community is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Community Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Healthcare 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 Community Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Healthcare has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Community Healthcare go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Community Healthcare
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to under-perform the Community Healthcare. In addition to that, Sabra Healthcare is 1.02 times more volatile than Community Healthcare Trust. It trades about -0.04 of its total potential returns per unit of risk. Community Healthcare Trust is currently generating about 0.14 per unit of volatility. If you would invest 1,888 in Community Healthcare Trust on November 2, 2024 and sell it today you would earn a total of 91.00 from holding Community Healthcare Trust or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Community Healthcare Trust
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Community Healthcare |
Sabra Healthcare and Community Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Community Healthcare
The main advantage of trading using opposite Sabra Healthcare and Community Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Community Healthcare 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 Community Healthcare will offset losses from the drop in Community Healthcare'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 |
| Community Healthcare vs. Global Medical REIT | Community Healthcare vs. National Health Investors | Community Healthcare vs. Healthpeak Properties | Community Healthcare vs. Sabra Healthcare REIT |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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