Correlation Between Sabra Healthcare and Veralto

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

Diversification Opportunities for Sabra Healthcare and Veralto

0.4

Correlation Coefficient

Sabra Healthcare  Veralto

Very weak diversification

The 3 months correlation between Sabra and Veralto is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Veralto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veralto 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 Veralto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veralto has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Veralto go up and down completely randomly.

Pair Corralation between Sabra Healthcare and Veralto

Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 0.98 times more return on investment than Veralto. However, Sabra Healthcare REIT is 1.02 times less risky than Veralto. It trades about 0.06 of its potential returns per unit of risk. Veralto is currently generating about 0.06 per unit of risk. If you would invest  1,135  in Sabra Healthcare REIT on October 22, 2024 and sell it today you would earn a total of  559.00  from holding Sabra Healthcare REIT or generate 49.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.73%
Values	Daily Returns

Sabra Healthcare REIT  vs.  Veralto

Sabra Healthcare REIT

Risk-Adjusted Performance

0 of 100

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.

Veralto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sabra Healthcare and Veralto

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

The idea behind Sabra Healthcare REIT and Veralto 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.