Correlation Between Sabra Healthcare and NL Industries
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and NL Industries 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 NL Industries 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 NL Industries, you can compare the effects of market volatilities on Sabra Healthcare and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and NL Industries.
Diversification Opportunities for Sabra Healthcare and NL Industries
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and NL Industries is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and NL Industries go up and down completely randomly.
Pair Corralation between Sabra Healthcare and NL Industries
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 0.55 times more return on investment than NL Industries. However, Sabra Healthcare REIT is 1.81 times less risky than NL Industries. It trades about 0.08 of its potential returns per unit of risk. NL Industries is currently generating about 0.04 per unit of risk. If you would invest 1,065 in Sabra Healthcare REIT on September 5, 2024 and sell it today you would earn a total of 780.00 from holding Sabra Healthcare REIT or generate 73.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. NL Industries
Performance |
| Timeline |
| Sabra Healthcare REIT |
| NL Industries |
Sabra Healthcare and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and NL Industries
The main advantage of trading using opposite Sabra Healthcare and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Sabra Healthcare vs. Boston Properties | Sabra Healthcare vs. Douglas Emmett | Sabra Healthcare vs. Vornado Realty Trust |
| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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