Correlation Between Sabra Healthcare and Delta Air
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Sabra Healthcare and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Delta Air.
Diversification Opportunities for Sabra Healthcare and Delta Air
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Delta is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Delta Air go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Delta Air
Given the investment horizon of 90 days Sabra Healthcare is expected to generate 3.52 times less return on investment than Delta Air. But when comparing it to its historical volatility, Sabra Healthcare REIT is 1.37 times less risky than Delta Air. It trades about 0.12 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,225 in Delta Air Lines on September 2, 2024 and sell it today you would earn a total of 2,157 from holding Delta Air Lines or generate 51.05% 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. Delta Air Lines
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Delta Air Lines |
Sabra Healthcare and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Delta Air
The main advantage of trading using opposite Sabra Healthcare and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air'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 |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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