Correlation Between Sabre Insurance and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Caledonia Mining 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 Sabre Insurance and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabre Insurance Group and Caledonia Mining, you can compare the effects of market volatilities on Sabre Insurance and Caledonia Mining 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 Sabre Insurance with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Caledonia Mining.
Diversification Opportunities for Sabre Insurance and Caledonia Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sabre and Caledonia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Sabre 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 Sabre Insurance Group are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Caledonia Mining go up and down completely randomly.
Pair Corralation between Sabre Insurance and Caledonia Mining
Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 0.74 times more return on investment than Caledonia Mining. However, Sabre Insurance Group is 1.35 times less risky than Caledonia Mining. It trades about 0.16 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.28 per unit of risk. 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabre Insurance Group vs. Caledonia Mining
Performance |
| Timeline |
| Sabre Insurance Group |
| Caledonia Mining |
Sabre Insurance and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and Caledonia Mining
The main advantage of trading using opposite Sabre Insurance and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Sabre Insurance vs. SupplyMe Capital PLC | Sabre Insurance vs. Lloyds Banking Group | Sabre Insurance vs. SANTANDER UK 8 | Sabre Insurance vs. 88 Energy |
| Caledonia Mining vs. Allianz Technology Trust | Caledonia Mining vs. HCA Healthcare | Caledonia Mining vs. Worldwide Healthcare Trust | Caledonia Mining vs. Omega Healthcare Investors |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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