Correlation Between Sabre Insurance and Acadia Realty

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

Diversification Opportunities for Sabre Insurance and Acadia Realty

-0.64

Correlation Coefficient

Sabre Insurance  Acadia Realty

Excellent diversification

The 3 months correlation between Sabre and Acadia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Acadia Realty go up and down completely randomly.

Pair Corralation between Sabre Insurance and Acadia Realty

Assuming the 90 days horizon Sabre Insurance is expected to generate 1.17 times less return on investment than Acadia Realty. In addition to that, Sabre Insurance is 1.22 times more volatile than Acadia Realty Trust. It trades about 0.05 of its total potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.07 per unit of volatility. If you would invest  1,266  in Acadia Realty Trust on October 4, 2024 and sell it today you would earn a total of  975.00  from holding Acadia Realty Trust or generate 77.01% 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.  Acadia Realty Trust

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.

Acadia Realty Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sabre Insurance and Acadia Realty

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

The idea behind Sabre Insurance Group and Acadia Realty Trust 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.