Correlation Between Lindsell Train and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Lindsell Train 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 Lindsell Train and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindsell Train Investment and Sabre Insurance Group, you can compare the effects of market volatilities on Lindsell Train 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 Lindsell Train with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Sabre Insurance.
Diversification Opportunities for Lindsell Train and Sabre Insurance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindsell and Sabre is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment 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 Lindsell Train 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 Lindsell Train Investment 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 Lindsell Train i.e., Lindsell Train and Sabre Insurance go up and down completely randomly.
Pair Corralation between Lindsell Train and Sabre Insurance
Assuming the 90 days trading horizon Lindsell Train is expected to generate 32.37 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Lindsell Train Investment is 1.26 times less risky than Sabre Insurance. It trades about 0.01 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 12,900 in Sabre Insurance Group on September 13, 2024 and sell it today you would earn a total of 780.00 from holding Sabre Insurance Group or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lindsell Train Investment vs. Sabre Insurance Group
Performance |
| Timeline |
| Lindsell Train Investment |
| Sabre Insurance Group |
Lindsell Train and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Sabre Insurance
The main advantage of trading using opposite Lindsell Train and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train 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.| Lindsell Train vs. LBG Media PLC | Lindsell Train vs. Liberty Media Corp | Lindsell Train vs. Schroders Investment Trusts | Lindsell Train vs. Livermore Investments Group |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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