Correlation Between SBI Insurance and Cabot
Can any of the company-specific risk be diversified away by investing in both SBI Insurance and Cabot 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 SBI Insurance and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Insurance Group and Cabot, you can compare the effects of market volatilities on SBI Insurance and Cabot 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 SBI Insurance with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and Cabot.
Diversification Opportunities for SBI Insurance and Cabot
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SBI and Cabot is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and SBI Insurance 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 SBI Insurance Group are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of SBI Insurance i.e., SBI Insurance and Cabot go up and down completely randomly.
Pair Corralation between SBI Insurance and Cabot
Assuming the 90 days trading horizon SBI Insurance Group is expected to under-perform the Cabot. In addition to that, SBI Insurance is 1.01 times more volatile than Cabot. It trades about 0.0 of its total potential returns per unit of risk. Cabot is currently generating about 0.04 per unit of volatility. If you would invest 6,281 in Cabot on October 11, 2024 and sell it today you would earn a total of 2,119 from holding Cabot or generate 33.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Insurance Group vs. Cabot
Performance |
| Timeline |
| SBI Insurance Group |
| Cabot |
SBI Insurance and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Insurance and Cabot
The main advantage of trading using opposite SBI Insurance and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Insurance position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| SBI Insurance vs. Performance Food Group | SBI Insurance vs. PREMIER FOODS | SBI Insurance vs. G III Apparel Group | SBI Insurance vs. alstria office REIT AG |
| Cabot vs. QBE Insurance Group | Cabot vs. Insurance Australia Group | Cabot vs. FUYO GENERAL LEASE | Cabot vs. SBI Insurance Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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