Correlation Between NMI Holdings and Sabra Health

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Sabra Health 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 NMI Holdings and Sabra Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Sabra Health Care, you can compare the effects of market volatilities on NMI Holdings and Sabra Health 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 NMI Holdings with a short position of Sabra Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Sabra Health.

Diversification Opportunities for NMI Holdings and Sabra Health

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between NMI and Sabra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Sabra Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabra Health Care and NMI Holdings 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 NMI Holdings are associated (or correlated) with Sabra Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabra Health Care has no effect on the direction of NMI Holdings i.e., NMI Holdings and Sabra Health go up and down completely randomly.

Pair Corralation between NMI Holdings and Sabra Health

Assuming the 90 days horizon NMI Holdings is expected to generate 0.94 times more return on investment than Sabra Health. However, NMI Holdings is 1.07 times less risky than Sabra Health. It trades about 0.09 of its potential returns per unit of risk. Sabra Health Care is currently generating about 0.08 per unit of risk. If you would invest  1,930  in NMI Holdings on September 12, 2024 and sell it today you would earn a total of  1,770  from holding NMI Holdings or generate 91.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NMI Holdings  vs.  Sabra Health Care

 Performance 
       Timeline  
NMI Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Sabra Health Care 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Sabra Health Care are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sabra Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NMI Holdings and Sabra Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NMI Holdings and Sabra Health

The main advantage of trading using opposite NMI Holdings and Sabra Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Sabra Health 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 Health will offset losses from the drop in Sabra Health's long position.
The idea behind NMI Holdings and Sabra Health Care 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Bonds Directory
Find actively traded corporate debentures issued by US companies
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance