Correlation Between CARSALESCOM and Sabra Health
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and Sabra Health Care, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and Sabra Health.
Diversification Opportunities for CARSALESCOM and Sabra Health
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CARSALESCOM and Sabra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and Sabra Health go up and down completely randomly.
Pair Corralation between CARSALESCOM and Sabra Health
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.95 times more return on investment than Sabra Health. However, CARSALESCOM is 1.06 times less risky than Sabra Health. It trades about 0.08 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.06 per unit of risk. If you would invest 1,227 in CARSALESCOM on September 26, 2024 and sell it today you would earn a total of 1,013 from holding CARSALESCOM or generate 82.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. Sabra Health Care
Performance |
| Timeline |
| CARSALESCOM |
| Sabra Health Care |
CARSALESCOM and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and Sabra Health
The main advantage of trading using opposite CARSALESCOM and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Microsoft | CARSALESCOM vs. Microsoft |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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