Correlation Between Sabre Insurance and Intermediate Capital
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Sabre Insurance and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Intermediate Capital.
Diversification Opportunities for Sabre Insurance and Intermediate Capital
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sabre and Intermediate is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Intermediate Capital go up and down completely randomly.
Pair Corralation between Sabre Insurance and Intermediate Capital
Assuming the 90 days trading horizon Sabre Insurance is expected to generate 8.64 times less return on investment than Intermediate Capital. But when comparing it to its historical volatility, Sabre Insurance Group is 1.03 times less risky than Intermediate Capital. It trades about 0.01 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 137,671 in Intermediate Capital Group on September 2, 2024 and sell it today you would earn a total of 74,129 from holding Intermediate Capital Group or generate 53.85% 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. Intermediate Capital Group
Performance |
| Timeline |
| Sabre Insurance Group |
| Intermediate Capital |
Sabre Insurance and Intermediate Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and Intermediate Capital
The main advantage of trading using opposite Sabre Insurance and Intermediate Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Intermediate Capital 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 Intermediate Capital will offset losses from the drop in Intermediate Capital's long position.| Sabre Insurance vs. Berkshire Hathaway | Sabre Insurance vs. Hyundai Motor | Sabre Insurance vs. Samsung Electronics Co | Sabre Insurance vs. Samsung Electronics Co |
| Intermediate Capital vs. Scandinavian Tobacco Group | Intermediate Capital vs. Southern Copper Corp | Intermediate Capital vs. Trainline Plc | Intermediate Capital vs. Bisichi 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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