Correlation Between Sabre Insurance and Webster Financial

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

Diversification Opportunities for Sabre Insurance and Webster Financial

0.07

Correlation Coefficient

Sabre Insurance  Webster Financial

Significant diversification

The 3 months correlation between Sabre and Webster is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Webster Financial go up and down completely randomly.

Pair Corralation between Sabre Insurance and Webster Financial

Assuming the 90 days horizon Sabre Insurance Group is expected to generate 1.48 times more return on investment than Webster Financial. However, Sabre Insurance is 1.48 times more volatile than Webster Financial. It trades about -0.07 of its potential returns per unit of risk. Webster Financial is currently generating about -0.13 per unit of risk. If you would invest  168.00  in Sabre Insurance Group on December 11, 2024 and sell it today you would lose (21.00) from holding Sabre Insurance Group or give up 12.5% of portfolio value over 90 days.

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

Sabre Insurance Group  vs.  Webster Financial

Sabre Insurance Group

Risk-Adjusted Performance

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Webster Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Webster Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sabre Insurance and Webster Financial

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

The idea behind Sabre Insurance Group and Webster Financial 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.