Correlation Between Sabra Health and Westag Getalit

Can any of the company-specific risk be diversified away by investing in both Sabra Health and Westag Getalit 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 Westag Getalit 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 Westag Getalit AG, you can compare the effects of market volatilities on Sabra Health and Westag Getalit 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 Westag Getalit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabra Health and Westag Getalit.

Diversification Opportunities for Sabra Health and Westag Getalit

-0.57

Correlation Coefficient

Sabra Health  Westag Getalit

Excellent diversification

The 3 months correlation between Sabra and Westag is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Health Care and Westag Getalit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westag Getalit AG 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 Westag Getalit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westag Getalit AG has no effect on the direction of Sabra Health i.e., Sabra Health and Westag Getalit go up and down completely randomly.

Pair Corralation between Sabra Health and Westag Getalit

Assuming the 90 days horizon Sabra Health Care is expected to under-perform the Westag Getalit. But the stock apears to be less risky and, when comparing its historical volatility, Sabra Health Care is 1.4 times less risky than Westag Getalit. The stock trades about -0.01 of its potential returns per unit of risk. The Westag Getalit AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Westag Getalit AG on September 26, 2024 and sell it today you would lose (80.00) from holding Westag Getalit AG or give up 3.2% of portfolio value over 90 days.

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

Sabra Health Care  vs.  Westag Getalit AG

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.

Westag Getalit AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westag Getalit AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westag Getalit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sabra Health and Westag Getalit

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

The idea behind Sabra Health Care and Westag Getalit AG 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.