Correlation Between Sabra Healthcare and Haverty Furniture

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

Diversification Opportunities for Sabra Healthcare and Haverty Furniture

0.3

Correlation Coefficient

Sabra Healthcare  Haverty Furniture

Weak diversification

The 24 months correlation between Sabra and Haverty is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sabra Healthcare REIT and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of Sabra Healthcare i.e., Sabra Healthcare and Haverty Furniture go up and down completely randomly.

Pair Corralation between Sabra Healthcare and Haverty Furniture

Given the investment horizon of 90 days Sabra Healthcare REIT is expected to generate 0.74 times more return on investment than Haverty Furniture. However, Sabra Healthcare REIT is 1.36 times less risky than Haverty Furniture. It trades about -0.05 of its potential returns per unit of risk. Haverty Furniture Companies is currently generating about -0.25 per unit of risk. If you would invest  1,419  in Sabra Healthcare REIT on March 12, 2024 and sell it today you would lose (20.00) from holding Sabra Healthcare REIT or give up 1.41% of portfolio value over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sabra Healthcare REIT  vs.  Haverty Furniture Companies

Sabra Healthcare REIT

Risk-Adjusted Performance

2 of 100

Weak

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

Haverty Furniture

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Haverty Furniture Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Haverty Furniture is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sabra Healthcare and Haverty Furniture

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

The idea behind Sabra Healthcare REIT and Haverty Furniture Companies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.