Correlation Between Sabra Healthcare and Tinybeans Group

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

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

Diversification Opportunities for Sabra Healthcare and Tinybeans Group

-0.27

Correlation Coefficient

Sabra Healthcare  Tinybeans Group

Very good diversification

The 3 months correlation between Sabra and Tinybeans is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Tinybeans Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinybeans Group and Sabra Healthcare 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 Healthcare REIT are associated (or correlated) with Tinybeans Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinybeans Group has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Tinybeans Group go up and down completely randomly.

Pair Corralation between Sabra Healthcare and Tinybeans Group

Given the investment horizon of 90 days Sabra Healthcare is expected to generate 34.96 times less return on investment than Tinybeans Group. But when comparing it to its historical volatility, Sabra Healthcare REIT is 32.15 times less risky than Tinybeans Group. It trades about 0.08 of its potential returns per unit of risk. Tinybeans Group Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tinybeans Group Limited on September 4, 2024 and sell it today you would lose (0.50) from holding Tinybeans Group Limited or give up 50.0% of portfolio value over 90 days.

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

Sabra Healthcare REIT  vs.  Tinybeans Group Limited

Sabra Healthcare REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Healthcare REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sabra Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tinybeans Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tinybeans Group Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tinybeans Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabra Healthcare and Tinybeans Group

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

The idea behind Sabra Healthcare REIT and Tinybeans Group Limited 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.