Correlation Between Sabra Healthcare and Franchise
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Franchise 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 Franchise 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 Franchise Group, you can compare the effects of market volatilities on Sabra Healthcare and Franchise 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 Franchise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Franchise.
Diversification Opportunities for Sabra Healthcare and Franchise
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and Franchise is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Franchise Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franchise 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 Franchise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franchise Group has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Franchise go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Franchise
Given the investment horizon of 90 days Sabra Healthcare is expected to generate 1.19 times less return on investment than Franchise. But when comparing it to its historical volatility, Sabra Healthcare REIT is 1.42 times less risky than Franchise. It trades about 0.12 of its potential returns per unit of risk. Franchise Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,169 in Franchise Group on August 24, 2024 and sell it today you would earn a total of 324.00 from holding Franchise Group or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.8% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Franchise Group
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sabra Healthcare and Franchise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Franchise
The main advantage of trading using opposite Sabra Healthcare and Franchise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Franchise 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 Franchise will offset losses from the drop in Franchise's long position.| Sabra Healthcare vs. Healthcare Realty Trust | Sabra Healthcare vs. Welltower | Sabra Healthcare vs. Diversified Healthcare Trust | Sabra Healthcare vs. Healthpeak Properties |
| Franchise vs. Maiden Holdings | Franchise vs. Nasdaq Inc | Franchise vs. Sun Life Financial | Franchise 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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