Correlation Between DeVry Education and Sabra Health
Can any of the company-specific risk be diversified away by investing in both DeVry Education 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 DeVry Education and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DeVry Education Group and Sabra Health Care, you can compare the effects of market volatilities on DeVry Education 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 DeVry Education with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DeVry Education and Sabra Health.
Diversification Opportunities for DeVry Education and Sabra Health
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between DeVry and Sabra is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding DeVry Education Group 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 DeVry Education 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 DeVry Education Group 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 DeVry Education i.e., DeVry Education and Sabra Health go up and down completely randomly.
Pair Corralation between DeVry Education and Sabra Health
Assuming the 90 days horizon DeVry Education Group is expected to generate 1.06 times more return on investment than Sabra Health. However, DeVry Education is 1.06 times more volatile than Sabra Health Care. It trades about 0.38 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.07 per unit of risk. If you would invest 8,250 in DeVry Education Group on October 20, 2024 and sell it today you would earn a total of 1,200 from holding DeVry Education Group or generate 14.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
DeVry Education Group vs. Sabra Health Care
Performance |
Timeline |
DeVry Education Group |
Sabra Health Care |
DeVry Education and Sabra Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DeVry Education and Sabra Health
The main advantage of trading using opposite DeVry Education and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DeVry Education 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.DeVry Education vs. Lendlease Group | DeVry Education vs. CARDINAL HEALTH | DeVry Education vs. MPH Health Care | DeVry Education vs. NAKED WINES PLC |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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