Correlation Between Cousins Properties and Sabra Healthcare

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

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

Diversification Opportunities for Cousins Properties and Sabra Healthcare

0.52

Correlation Coefficient

Cousins Properties  Sabra Healthcare

Very weak diversification

The 3 months correlation between Cousins and Sabra is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cousins Properties Incorporate 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 Cousins Properties 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 Cousins Properties Incorporated 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 Cousins Properties i.e., Cousins Properties and Sabra Healthcare go up and down completely randomly.

Pair Corralation between Cousins Properties and Sabra Healthcare

Considering the 90-day investment horizon Cousins Properties Incorporated is expected to generate 1.26 times more return on investment than Sabra Healthcare. However, Cousins Properties is 1.26 times more volatile than Sabra Healthcare REIT. It trades about 0.01 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about -0.19 per unit of risk. If you would invest  3,059  in Cousins Properties Incorporated on October 6, 2024 and sell it today you would lose (4.00) from holding Cousins Properties Incorporated or give up 0.13% of portfolio value over 90 days.

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

Cousins Properties Incorporate  vs.  Sabra Healthcare REIT

Cousins Properties

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cousins Properties Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cousins Properties may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sabra Healthcare REIT

Risk-Adjusted Performance

0 of 100

Very 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 Cousins Properties and Sabra Healthcare

The main advantage of trading using opposite Cousins Properties and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cousins Properties 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 Cousins Properties Incorporated 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.