Correlation Between CVW CleanTech and Sabra Healthcare

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

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

Diversification Opportunities for CVW CleanTech and Sabra Healthcare

-0.36

Correlation Coefficient

CVW CleanTech  Sabra Healthcare

Very good diversification

The 3 months correlation between CVW and Sabra is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech i.e., CVW CleanTech and Sabra Healthcare go up and down completely randomly.

Pair Corralation between CVW CleanTech and Sabra Healthcare

Assuming the 90 days horizon CVW CleanTech is expected to generate 6.58 times more return on investment than Sabra Healthcare. However, CVW CleanTech is 6.58 times more volatile than Sabra Healthcare REIT. It trades about 0.05 of its potential returns per unit of risk. Sabra Healthcare REIT is currently generating about 0.15 per unit of risk. If you would invest  56.00  in CVW CleanTech on August 22, 2024 and sell it today you would earn a total of  6.00  from holding CVW CleanTech or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.52%
Values	Daily Returns

CVW CleanTech  vs.  Sabra Healthcare REIT

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sabra Healthcare REIT

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Healthcare REIT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Sabra Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and Sabra Healthcare

The main advantage of trading using opposite CVW CleanTech and Sabra Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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 CVW CleanTech 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.