Correlation Between Sabra Health and FIRST SHIP

Can any of the company-specific risk be diversified away by investing in both Sabra Health and FIRST SHIP 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 FIRST SHIP 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 FIRST SHIP LEASE, you can compare the effects of market volatilities on Sabra Health and FIRST SHIP 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 FIRST SHIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and FIRST SHIP.

Diversification Opportunities for Sabra Health and FIRST SHIP

-0.1

Correlation Coefficient

Sabra Health  FIRST SHIP

Good diversification

The 3 months correlation between Sabra and FIRST is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and FIRST SHIP LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SHIP LEASE 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 FIRST SHIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SHIP LEASE has no effect on the direction of Sabra Health i.e., Sabra Health and FIRST SHIP go up and down completely randomly.

Pair Corralation between Sabra Health and FIRST SHIP

Assuming the 90 days horizon Sabra Health is expected to generate 2.18 times less return on investment than FIRST SHIP. But when comparing it to its historical volatility, Sabra Health Care is 1.95 times less risky than FIRST SHIP. It trades about 0.03 of its potential returns per unit of risk. FIRST SHIP LEASE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.62  in FIRST SHIP LEASE on April 24, 2025 and sell it today you would earn a total of  0.05  from holding FIRST SHIP LEASE or generate 3.09% return on investment over 90 days.

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

Sabra Health Care  vs.  FIRST SHIP LEASE

Sabra Health Care

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Health Care are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

FIRST SHIP LEASE

Risk-Adjusted Performance

Weak

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 stable basic indicators, FIRST SHIP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sabra Health and FIRST SHIP

The main advantage of trading using opposite Sabra Health and FIRST SHIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabra Health position performs unexpectedly, FIRST SHIP 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 FIRST SHIP will offset losses from the drop in FIRST SHIP's long position.

The idea behind Sabra Health Care and FIRST SHIP LEASE 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.