Correlation Between Air Lease and Sabre Insurance

Can any of the company-specific risk be diversified away by investing in both Air Lease and Sabre Insurance 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 Air Lease and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and Sabre Insurance Group, you can compare the effects of market volatilities on Air Lease and Sabre Insurance 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 Air Lease with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Sabre Insurance.

Diversification Opportunities for Air Lease and Sabre Insurance

-0.54

Correlation Coefficient

Air Lease  Sabre Insurance

Excellent diversification

The 3 months correlation between Air and Sabre is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and Air Lease 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 Air Lease are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Air Lease i.e., Air Lease and Sabre Insurance go up and down completely randomly.

Pair Corralation between Air Lease and Sabre Insurance

Assuming the 90 days trading horizon Air Lease is expected to under-perform the Sabre Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 1.63 times less risky than Sabre Insurance. The stock trades about -0.14 of its potential returns per unit of risk. The Sabre Insurance Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  156.00  in Sabre Insurance Group on September 27, 2024 and sell it today you would earn a total of  14.00  from holding Sabre Insurance Group or generate 8.97% return on investment over 90 days.

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

Air Lease  vs.  Sabre Insurance Group

Air Lease

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Air Lease and Sabre Insurance

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

The idea behind Air Lease and Sabre Insurance Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.