Correlation Between Brockhaus Capital and Sabra Health

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

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

Diversification Opportunities for Brockhaus Capital and Sabra Health

-0.56

Correlation Coefficient

Brockhaus Capital  Sabra Health

Excellent diversification

The 3 months correlation between Brockhaus and Sabra is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management 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 Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Sabra Health go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Sabra Health

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to generate 2.36 times more return on investment than Sabra Health. However, Brockhaus Capital is 2.36 times more volatile than Sabra Health Care. It trades about 0.11 of its potential returns per unit of risk. Sabra Health Care is currently generating about -0.38 per unit of risk. If you would invest  2,330  in Brockhaus Capital Management on September 24, 2024 and sell it today you would earn a total of  140.00  from holding Brockhaus Capital Management or generate 6.01% return on investment over 90 days.

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

Brockhaus Capital Management  vs.  Sabra Health Care

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sabra Health Care

Risk-Adjusted Performance

0 of 100

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 Brockhaus Capital and Sabra Health

The main advantage of trading using opposite Brockhaus Capital and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.