Correlation Between CROWN and Sabra Healthcare

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

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

Diversification Opportunities for CROWN and Sabra Healthcare

0.51

Correlation Coefficient

CROWN  Sabra Healthcare

Very weak diversification

The 3 months correlation between CROWN and Sabra is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CROWN CASTLE INTERNATIONAL 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 CROWN 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 CROWN CASTLE INTERNATIONAL 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 CROWN i.e., CROWN and Sabra Healthcare go up and down completely randomly.

Pair Corralation between CROWN and Sabra Healthcare

Assuming the 90 days trading horizon CROWN CASTLE INTERNATIONAL is expected to generate 0.22 times more return on investment than Sabra Healthcare. However, CROWN CASTLE INTERNATIONAL is 4.49 times less risky than Sabra Healthcare. It trades about 0.03 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about -0.09 per unit of risk. If you would invest  9,160  in CROWN CASTLE INTERNATIONAL on October 23, 2024 and sell it today you would earn a total of  51.00  from holding CROWN CASTLE INTERNATIONAL or generate 0.56% return on investment over 90 days.

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

CROWN CASTLE INTERNATIONAL  vs.  Sabra Healthcare REIT

CROWN CASTLE INTERNA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with CROWN and Sabra Healthcare

The main advantage of trading using opposite CROWN and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CROWN 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 CROWN CASTLE INTERNATIONAL 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 Commodity Directory module to find actively traded commodities issued by global exchanges.