Correlation Between Sabre Insurance and MG Plc
Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and MG Plc 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 MG Plc 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 MG Plc, you can compare the effects of market volatilities on Sabre Insurance and MG Plc 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 MG Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and MG Plc.
Diversification Opportunities for Sabre Insurance and MG Plc
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sabre and MNG is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and MG Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG 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 MG Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Plc has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and MG Plc go up and down completely randomly.
Pair Corralation between Sabre Insurance and MG Plc
Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 2.1 times more return on investment than MG Plc. However, Sabre Insurance is 2.1 times more volatile than MG Plc. It trades about 0.11 of its potential returns per unit of risk. MG Plc is currently generating about 0.02 per unit of risk. If you would invest 13,240 in Sabre Insurance Group on September 12, 2024 and sell it today you would earn a total of 560.00 from holding Sabre Insurance Group or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sabre Insurance Group vs. MG Plc
Performance |
| Timeline |
| Sabre Insurance Group |
| MG Plc |
Sabre Insurance and MG Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabre Insurance and MG Plc
The main advantage of trading using opposite Sabre Insurance and MG Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, MG Plc 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 MG Plc will offset losses from the drop in MG Plc's long position.| Sabre Insurance vs. Bloomsbury Publishing Plc | Sabre Insurance vs. Molson Coors Beverage | Sabre Insurance vs. METALL ZUG AG | Sabre Insurance vs. Associated British Foods |
| MG Plc vs. Sabre Insurance Group | MG Plc vs. Royal Bank of | MG Plc vs. Southwest Airlines Co | MG Plc vs. Taiwan Semiconductor Manufacturing |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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