Correlation Between Sabre Insurance and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Inspiration Healthcare 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 Inspiration Healthcare 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 Inspiration Healthcare Group, you can compare the effects of market volatilities on Sabre Insurance and Inspiration Healthcare 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 Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Inspiration Healthcare.
Diversification Opportunities for Sabre Insurance and Inspiration Healthcare
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sabre and Inspiration is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare 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 Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Sabre Insurance and Inspiration Healthcare
Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Inspiration Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 2.73 times less risky than Inspiration Healthcare. The stock trades about -0.09 of its potential returns per unit of risk. The Inspiration Healthcare Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,050 in Inspiration Healthcare Group on August 30, 2024 and sell it today you would lose (525.00) from holding Inspiration Healthcare Group or give up 25.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabre Insurance Group vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Sabre Insurance Group |
| Inspiration Healthcare |
Sabre Insurance and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and Inspiration Healthcare
The main advantage of trading using opposite Sabre Insurance and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Inspiration Healthcare 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.| Sabre Insurance vs. Samsung Electronics Co | Sabre Insurance vs. Samsung Electronics Co | Sabre Insurance vs. Toyota Motor Corp | Sabre Insurance vs. Reliance Industries Ltd |
| Inspiration Healthcare vs. Toyota Motor Corp | Inspiration Healthcare vs. SoftBank Group Corp | Inspiration Healthcare vs. OTP Bank Nyrt | Inspiration Healthcare vs. Las Vegas Sands |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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