Correlation Between Associated British and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Sabre Insurance Group, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Sabre Insurance.
Diversification Opportunities for Associated British and Sabre Insurance
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Associated and Sabre is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods 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 Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Sabre Insurance go up and down completely randomly.
Pair Corralation between Associated British and Sabre Insurance
Assuming the 90 days trading horizon Associated British is expected to generate 1.04 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Associated British Foods is 1.35 times less risky than Sabre Insurance. It trades about 0.06 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,995 in Sabre Insurance Group on September 13, 2024 and sell it today you would earn a total of 3,685 from holding Sabre Insurance Group or generate 36.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Sabre Insurance Group
Performance |
| Timeline |
| Associated British Foods |
| Sabre Insurance Group |
Associated British and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Sabre Insurance
The main advantage of trading using opposite Associated British and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Ebro Foods | Associated British vs. Premier Foods PLC | Associated British vs. Cairo Communication SpA | Associated British vs. Gruppo MutuiOnline SpA |
| Sabre Insurance vs. Roadside Real Estate | Sabre Insurance vs. Monster Beverage Corp | Sabre Insurance vs. Ebro Foods | Sabre Insurance vs. Lindsell Train 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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