Correlation Between Sabra Healthcare and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and RBC Bearings 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 RBC Bearings 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 RBC Bearings Incorporated, you can compare the effects of market volatilities on Sabra Healthcare and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and RBC Bearings.
Diversification Opportunities for Sabra Healthcare and RBC Bearings
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sabra and RBC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and RBC Bearings go up and down completely randomly.
Pair Corralation between Sabra Healthcare and RBC Bearings
Given the investment horizon of 90 days Sabra Healthcare is expected to generate 1.07 times less return on investment than RBC Bearings. But when comparing it to its historical volatility, Sabra Healthcare REIT is 1.09 times less risky than RBC Bearings. It trades about 0.13 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 29,499 in RBC Bearings Incorporated on August 26, 2024 and sell it today you would earn a total of 4,183 from holding RBC Bearings Incorporated or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. RBC Bearings Incorporated
Performance |
| Timeline |
| Sabra Healthcare REIT |
| RBC Bearings |
Sabra Healthcare and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and RBC Bearings
The main advantage of trading using opposite Sabra Healthcare and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' 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 |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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