Correlation Between United States and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both United States and Sabre Insurance 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 United States and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Sabre Insurance Group, you can compare the effects of market volatilities on United States and Sabre Insurance 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 United States with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Sabre Insurance.
Diversification Opportunities for United States and Sabre Insurance
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Sabre is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and United States 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 United States Steel are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of United States i.e., United States and Sabre Insurance go up and down completely randomly.
Pair Corralation between United States and Sabre Insurance
Assuming the 90 days trading horizon United States Steel is expected to generate 2.33 times more return on investment than Sabre Insurance. However, United States is 2.33 times more volatile than Sabre Insurance Group. It trades about 0.28 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.16 per unit of risk. If you would invest 3,134 in United States Steel on October 30, 2024 and sell it today you would earn a total of 562.00 from holding United States Steel or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Sabre Insurance Group
Performance |
| Timeline |
| United States Steel |
| Sabre Insurance Group |
United States and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Sabre Insurance
The main advantage of trading using opposite United States and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| United States vs. URU Metals | United States vs. Power Metal Resources | United States vs. Sovereign Metals | United States vs. Central Asia Metals |
| Sabre Insurance vs. Erste Group Bank | Sabre Insurance vs. Virgin Wines UK | Sabre Insurance vs. Synchrony Financial | Sabre Insurance vs. Ecclesiastical Insurance Office |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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