Correlation Between UNITED UTILITIES and Sabra Health
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and Sabra Health 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 UNITED UTILITIES and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and Sabra Health Care, you can compare the effects of market volatilities on UNITED UTILITIES and Sabra Health 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 UNITED UTILITIES with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Sabra Health.
Diversification Opportunities for UNITED UTILITIES and Sabra Health
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Sabra is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care and UNITED UTILITIES 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 UNITED UTILITIES GR are associated (or correlated) with Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Sabra Health go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Sabra Health
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 2.53 times less return on investment than Sabra Health. But when comparing it to its historical volatility, UNITED UTILITIES GR is 1.16 times less risky than Sabra Health. It trades about 0.04 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 978.00 in Sabra Health Care on September 3, 2024 and sell it today you would earn a total of 803.00 from holding Sabra Health Care or generate 82.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. Sabra Health Care
Performance |
| Timeline |
| UNITED UTILITIES |
| Sabra Health Care |
UNITED UTILITIES and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Sabra Health
The main advantage of trading using opposite UNITED UTILITIES and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, Sabra Health 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 Sabra Health will offset losses from the drop in Sabra Health's long position.| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
| Sabra Health vs. THAI BEVERAGE | Sabra Health vs. Lifeway Foods | Sabra Health vs. Cal Maine Foods | Sabra Health vs. SENECA FOODS A |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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