Correlation Between Sabra Health and LANDSEA HOMES
Can any of the company-specific risk be diversified away by investing in both Sabra Health and LANDSEA HOMES 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 Health and LANDSEA HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabra Health Care and LANDSEA HOMES P, you can compare the effects of market volatilities on Sabra Health and LANDSEA HOMES 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 Health with a short position of LANDSEA HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and LANDSEA HOMES.
Diversification Opportunities for Sabra Health and LANDSEA HOMES
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sabra and LANDSEA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and LANDSEA HOMES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANDSEA HOMES P and Sabra 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 Sabra Health Care are associated (or correlated) with LANDSEA HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANDSEA HOMES P has no effect on the direction of Sabra Health i.e., Sabra Health and LANDSEA HOMES go up and down completely randomly.
Pair Corralation between Sabra Health and LANDSEA HOMES
Assuming the 90 days horizon Sabra Health is expected to generate 18.85 times less return on investment than LANDSEA HOMES. But when comparing it to its historical volatility, Sabra Health Care is 6.1 times less risky than LANDSEA HOMES. It trades about 0.05 of its potential returns per unit of risk. LANDSEA HOMES P is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 505.00 in LANDSEA HOMES P on April 21, 2025 and sell it today you would earn a total of 460.00 from holding LANDSEA HOMES P or generate 91.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 84.38% |
Values | Daily Returns |
Sabra Health Care vs. LANDSEA HOMES P
Performance |
Timeline |
Sabra Health Care |
LANDSEA HOMES P |
Risk-Adjusted Performance
Good
Weak | Strong |
Sabra Health and LANDSEA HOMES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sabra Health and LANDSEA HOMES
The main advantage of trading using opposite Sabra Health and LANDSEA HOMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, LANDSEA HOMES 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 LANDSEA HOMES will offset losses from the drop in LANDSEA HOMES's long position.Sabra Health vs. Welltower | Sabra Health vs. Healthpeak Properties | Sabra Health vs. Medical Properties Trust | Sabra Health vs. National Health Investors |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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