Correlation Between Sabre Insurance and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on Sabre Insurance and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and International Consolidated.
Diversification Opportunities for Sabre Insurance and International Consolidated
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sabre and International is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and International Consolidated go up and down completely randomly.
Pair Corralation between Sabre Insurance and International Consolidated
Assuming the 90 days trading horizon Sabre Insurance is expected to generate 1.39 times less return on investment than International Consolidated. But when comparing it to its historical volatility, Sabre Insurance Group is 1.05 times less risky than International Consolidated. It trades about 0.06 of its potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,698 in International Consolidated Airlines on October 16, 2024 and sell it today you would earn a total of 13,762 from holding International Consolidated Airlines or generate 82.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sabre Insurance Group vs. International Consolidated Air
Performance |
| Timeline |
| Sabre Insurance Group |
| International Consolidated |
Sabre Insurance and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and International Consolidated
The main advantage of trading using opposite Sabre Insurance and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Sabre Insurance vs. URU Metals | Sabre Insurance vs. Playtech Plc | Sabre Insurance vs. Cornish Metals | Sabre Insurance vs. Universal Music 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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