Correlation Between Sabra Healthcare and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on Sabra Healthcare and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and ServiceNow.
Diversification Opportunities for Sabra Healthcare and ServiceNow
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabra and ServiceNow is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and ServiceNow go up and down completely randomly.
Pair Corralation between Sabra Healthcare and ServiceNow
Given the investment horizon of 90 days Sabra Healthcare is expected to generate 1.7 times less return on investment than ServiceNow. But when comparing it to its historical volatility, Sabra Healthcare REIT is 1.37 times less risky than ServiceNow. It trades about 0.08 of its potential returns per unit of risk. ServiceNow is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 40,164 in ServiceNow on September 2, 2024 and sell it today you would earn a total of 64,780 from holding ServiceNow or generate 161.29% 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. ServiceNow
Performance |
| Timeline |
| Sabra Healthcare REIT |
| ServiceNow |
Sabra Healthcare and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and ServiceNow
The main advantage of trading using opposite Sabra Healthcare and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow'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 |
| ServiceNow vs. Datadog | ServiceNow vs. Gitlab Inc | ServiceNow vs. Atlassian Corp Plc | ServiceNow vs. HubSpot |
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 Correlations module to find global opportunities by holding instruments from different markets.
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