Correlation Between Citizens Bancorp and Sabra Healthcare

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

By analyzing existing cross correlation between Citizens Bancorp Investment and Sabra Healthcare REIT, you can compare the effects of market volatilities on Citizens Bancorp and Sabra Healthcare 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 Citizens Bancorp with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Bancorp and Sabra Healthcare.

Diversification Opportunities for Citizens Bancorp and Sabra Healthcare

-0.14

Correlation Coefficient

Citizens Bancorp  Sabra Healthcare

Good diversification

The 3 months correlation between Citizens and Sabra is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancorp Investment and Sabra Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Healthcare REIT and Citizens Bancorp 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 Citizens Bancorp Investment are associated (or correlated) with Sabra Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Healthcare REIT has no effect on the direction of Citizens Bancorp i.e., Citizens Bancorp and Sabra Healthcare go up and down completely randomly.

Pair Corralation between Citizens Bancorp and Sabra Healthcare

Given the investment horizon of 90 days Citizens Bancorp Investment is expected to generate 1.13 times more return on investment than Sabra Healthcare. However, Citizens Bancorp is 1.13 times more volatile than Sabra Healthcare REIT. It trades about 0.07 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.0 per unit of risk. If you would invest  2,377  in Citizens Bancorp Investment on September 12, 2024 and sell it today you would earn a total of  178.00  from holding Citizens Bancorp Investment or generate 7.49% return on investment over 90 days.

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

Citizens Bancorp Investment  vs.  Sabra Healthcare REIT

Citizens Bancorp Inv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Citizens Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sabra Healthcare REIT

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sabra Healthcare REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sabra Healthcare is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citizens Bancorp and Sabra Healthcare

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

The idea behind Citizens Bancorp Investment and Sabra Healthcare REIT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.