Correlation Between Dave Busters and Sabra Healthcare

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

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

Diversification Opportunities for Dave Busters and Sabra Healthcare

0.87

Correlation Coefficient

Dave Busters  Sabra Healthcare

Very poor diversification

The 3 months correlation between Dave and Sabra is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment 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 Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Sabra Healthcare go up and down completely randomly.

Pair Corralation between Dave Busters and Sabra Healthcare

Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Sabra Healthcare. In addition to that, Dave Busters is 2.17 times more volatile than Sabra Healthcare REIT. It trades about -0.01 of its total potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.08 per unit of volatility. If you would invest  949.00  in Sabra Healthcare REIT on December 2, 2024 and sell it today you would earn a total of  712.00  from holding Sabra Healthcare REIT or generate 75.03% return on investment over 90 days.

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

Dave Busters Entertainment  vs.  Sabra Healthcare REIT

Dave Busters Enterta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Dave Busters and Sabra Healthcare

The main advantage of trading using opposite Dave Busters and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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 Dave Busters Entertainment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.