Correlation Between Sabra Health and Consolidated Communications

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

By analyzing existing cross correlation between Sabra Health Care and Consolidated Communications Holdings, you can compare the effects of market volatilities on Sabra Health and Consolidated Communications 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 Sabra Health with a short position of Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Consolidated Communications.

Diversification Opportunities for Sabra Health and Consolidated Communications

0.39

Correlation Coefficient

Sabra Health  Consolidated Communications

Weak diversification

The 3 months correlation between Sabra and Consolidated is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications and Sabra Health 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 Sabra Health Care are associated (or correlated) with Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of Sabra Health i.e., Sabra Health and Consolidated Communications go up and down completely randomly.

Pair Corralation between Sabra Health and Consolidated Communications

Assuming the 90 days horizon Sabra Health Care is expected to under-perform the Consolidated Communications. In addition to that, Sabra Health is 2.72 times more volatile than Consolidated Communications Holdings. It trades about -0.32 of its total potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.14 per unit of volatility. If you would invest  442.00  in Consolidated Communications Holdings on September 27, 2024 and sell it today you would earn a total of  6.00  from holding Consolidated Communications Holdings or generate 1.36% return on investment over 90 days.

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

Sabra Health Care  vs.  Consolidated Communications Ho

Sabra Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabra Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabra Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Consolidated Communications

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sabra Health and Consolidated Communications

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

The idea behind Sabra Health Care and Consolidated Communications Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.