Correlation Between National Health and Sabra Health
Can any of the company-specific risk be diversified away by investing in both National Health 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 National Health and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and Sabra Health Care, you can compare the effects of market volatilities on National Health 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 National Health with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and Sabra Health.
Diversification Opportunities for National Health and Sabra Health
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Sabra is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors 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 National Health 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 National Health Investors 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 National Health i.e., National Health and Sabra Health go up and down completely randomly.
Pair Corralation between National Health and Sabra Health
Assuming the 90 days horizon National Health Investors is expected to generate 0.97 times more return on investment than Sabra Health. However, National Health Investors is 1.03 times less risky than Sabra Health. It trades about 0.14 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.11 per unit of risk. If you would invest 4,386 in National Health Investors on August 25, 2024 and sell it today you would earn a total of 2,964 from holding National Health Investors or generate 67.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. Sabra Health Care
Performance |
| Timeline |
| National Health Investors |
| Sabra Health Care |
National Health and Sabra Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and Sabra Health
The main advantage of trading using opposite National Health and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health 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.| National Health vs. Nordic Semiconductor ASA | National Health vs. Geratherm Medical AG | National Health vs. Advanced Medical Solutions | National Health vs. Apyx Medical Corp |
| Sabra Health vs. Welltower | Sabra Health vs. Omega Healthcare Investors | Sabra Health vs. Medical Properties Trust | Sabra Health vs. National Health Investors |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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