Correlation Between FIRST SHIP and Sabra Health

Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIRST SHIP LEASE and Sabra Health Care, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Sabra Health.

Diversification Opportunities for FIRST SHIP and Sabra Health

-0.1

Correlation Coefficient

FIRST SHIP  Sabra Health

Good diversification

The 3 months correlation between FIRST and Sabra is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE 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 FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Sabra Health go up and down completely randomly.

Pair Corralation between FIRST SHIP and Sabra Health

Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 1.89 times more return on investment than Sabra Health. However, FIRST SHIP is 1.89 times more volatile than Sabra Health Care. It trades about 0.03 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.0 per unit of risk. If you would invest  1.62  in FIRST SHIP LEASE on April 23, 2025 and sell it today you would earn a total of  0.06  from holding FIRST SHIP LEASE or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FIRST SHIP LEASE  vs.  Sabra Health Care

FIRST SHIP LEASE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SHIP LEASE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FIRST SHIP may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Sabra Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabra Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabra Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FIRST SHIP and Sabra Health

The main advantage of trading using opposite FIRST SHIP and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.

The idea behind FIRST SHIP LEASE and Sabra Health Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.