Correlation Between Sabre Insurance and Arthur J

Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Arthur J 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 Arthur J 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 Arthur J Gallagher, you can compare the effects of market volatilities on Sabre Insurance and Arthur J 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 Arthur J. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Arthur J.

Diversification Opportunities for Sabre Insurance and Arthur J

-0.71

Correlation Coefficient

Sabre Insurance  Arthur J

Pay attention - limited upside

The 3 months correlation between Sabre and Arthur is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Arthur J go up and down completely randomly.

Pair Corralation between Sabre Insurance and Arthur J

Assuming the 90 days horizon Sabre Insurance is expected to generate 1.68 times less return on investment than Arthur J. In addition to that, Sabre Insurance is 1.43 times more volatile than Arthur J Gallagher. It trades about 0.02 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.05 per unit of volatility. If you would invest  22,464  in Arthur J Gallagher on September 27, 2024 and sell it today you would earn a total of  4,596  from holding Arthur J Gallagher or generate 20.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Sabre Insurance Group  vs.  Arthur J Gallagher

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arthur J Gallagher

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sabre Insurance and Arthur J

The main advantage of trading using opposite Sabre Insurance and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, Arthur J 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 Arthur J will offset losses from the drop in Arthur J's long position.

The idea behind Sabre Insurance Group and Arthur J Gallagher pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.