Correlation Between Sabra Healthcare and Western Digital
Can any of the company-specific risk be diversified away by investing in both Sabra Healthcare and Western Digital 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 Western Digital 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 Western Digital, you can compare the effects of market volatilities on Sabra Healthcare and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Healthcare and Western Digital.
Diversification Opportunities for Sabra Healthcare and Western Digital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and Western is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Western Digital go up and down completely randomly.
Pair Corralation between Sabra Healthcare and Western Digital
Given the investment horizon of 90 days Sabra Healthcare REIT is expected to under-perform the Western Digital. But the stock apears to be less risky and, when comparing its historical volatility, Sabra Healthcare REIT is 1.29 times less risky than Western Digital. The stock trades about -0.04 of its potential returns per unit of risk. The Western Digital is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,971 in Western Digital on August 27, 2024 and sell it today you would lose (28.00) from holding Western Digital or give up 0.4% 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. Western Digital
Performance |
| Timeline |
| Sabra Healthcare REIT |
| Western Digital |
Sabra Healthcare and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabra Healthcare and Western Digital
The main advantage of trading using opposite Sabra Healthcare and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Healthcare position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital'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 |
| Western Digital vs. D Wave Quantum | Western Digital vs. Rigetti Computing | Western Digital vs. Cricut Inc | Western Digital vs. Quantum Computing |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |