Correlation Between Sabre Insurance and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Sabre Insurance and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Fevertree Drinks.
Diversification Opportunities for Sabre Insurance and Fevertree Drinks
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabre and Fevertree is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Sabre Insurance and Fevertree Drinks
Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Fevertree Drinks. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 3.73 times less risky than Fevertree Drinks. The stock trades about -0.22 of its potential returns per unit of risk. The Fevertree Drinks Plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 66,050 in Fevertree Drinks Plc on November 7, 2024 and sell it today you would earn a total of 7,850 from holding Fevertree Drinks Plc or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sabre Insurance Group vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Sabre Insurance Group |
| Fevertree Drinks Plc |
Sabre Insurance and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and Fevertree Drinks
The main advantage of trading using opposite Sabre Insurance and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Sabre Insurance vs. Aeorema Communications Plc | Sabre Insurance vs. Capital Drilling | Sabre Insurance vs. Global Net Lease | Sabre Insurance vs. Premier Foods PLC |
| Fevertree Drinks vs. Teradata Corp | Fevertree Drinks vs. Datalogic | Fevertree Drinks vs. Ion Beam Applications | Fevertree Drinks vs. Hochschild Mining plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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