Correlation Between Sabra Healthcare and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies, you can compare the effects of market volatilities on Sabra Healthcare and Sensient Technologies 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Sensient Technologies.
Diversification Opportunities for Sabra Healthcare and Sensient Technologies
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and Sensient is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Sensient Technologies go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Sensient Technologies
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to under-perform the Sensient Technologies. In addition to that, Sabra Healthcare is 1.4 times more volatile than Sensient Technologies. It trades about -0.28 of its total potential returns per unit of risk. Sensient Technologies is currently generating about -0.19 per unit of volatility. If you would invest 8,039 in Sensient Technologies on September 12, 2024 and sell it today you would lose (375.00) from holding Sensient Technologies or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabra Healthcare REIT vs. Sensient Technologies
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Sensient Technologies |
Sabra Healthcare and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Sensient Technologies
The main advantage of trading using opposite Sabra Healthcare and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Sensient Technologies 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' 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 |
| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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