Correlation Between Healthpeak Properties and Sabra Healthcare

Can any of the company-specific risk be diversified away by investing in both Healthpeak 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 Healthpeak 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 Healthpeak Properties and Sabra Healthcare REIT, you can compare the effects of market volatilities on Healthpeak 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 Healthpeak Properties with a short position of Sabra Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthpeak Properties and Sabra Healthcare.

Diversification Opportunities for Healthpeak Properties and Sabra Healthcare

0.9

Correlation Coefficient

Healthpeak Properties  Sabra Healthcare

Almost no diversification

The 3 months correlation between Healthpeak and Sabra is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties 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 Healthpeak 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 Healthpeak Properties 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 Healthpeak Properties i.e., Healthpeak Properties and Sabra Healthcare go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Sabra Healthcare

Considering the 90-day investment horizon Healthpeak Properties is expected to generate 0.86 times more return on investment than Sabra Healthcare. However, Healthpeak Properties is 1.16 times less risky than Sabra Healthcare. It trades about -0.08 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about -0.11 per unit of risk. If you would invest  2,165  in Healthpeak Properties on November 28, 2024 and sell it today you would lose (144.00) from holding Healthpeak Properties or give up 6.65% of portfolio value over 90 days.

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

Healthpeak Properties  vs.  Sabra Healthcare REIT

Healthpeak Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sabra Healthcare REIT

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Healthpeak Properties and Sabra Healthcare

The main advantage of trading using opposite Healthpeak Properties and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthpeak 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 Healthpeak Properties 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.