Correlation Between BC IRON and Sabre Insurance

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

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

Diversification Opportunities for BC IRON and Sabre Insurance

-0.23

Correlation Coefficient

BC IRON  Sabre Insurance

Very good diversification

The 3 months correlation between BC3 and Sabre is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BC IRON 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 BC IRON 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 BC IRON 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 BC IRON i.e., BC IRON and Sabre Insurance go up and down completely randomly.

Pair Corralation between BC IRON and Sabre Insurance

Assuming the 90 days trading horizon BC IRON is expected to generate 4.09 times less return on investment than Sabre Insurance. In addition to that, BC IRON is 1.3 times more volatile than Sabre Insurance Group. It trades about 0.02 of its total potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.08 per unit of volatility. If you would invest  169.00  in Sabre Insurance Group on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Sabre Insurance Group or generate 2.96% return on investment over 90 days.

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

BC IRON  vs.  Sabre Insurance Group

BC IRON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sabre Insurance Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 BC IRON and Sabre Insurance

The main advantage of trading using opposite BC IRON and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BC IRON 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 BC IRON 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.