Correlation Between Booking Holdings and Sabre

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

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

Diversification Opportunities for Booking Holdings and Sabre

0.0

Correlation Coefficient

Booking Holdings  Sabre

Pay attention - limited upside

The 3 months correlation between Booking and Sabre is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Sabre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre and Booking Holdings 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 Booking Holdings are associated (or correlated) with Sabre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre has no effect on the direction of Booking Holdings i.e., Booking Holdings and Sabre go up and down completely randomly.

Pair Corralation between Booking Holdings and Sabre

Given the investment horizon of 90 days Booking Holdings is expected to generate 0.4 times more return on investment than Sabre. However, Booking Holdings is 2.53 times less risky than Sabre. It trades about 0.1 of its potential returns per unit of risk. Sabre is currently generating about -0.08 per unit of risk. If you would invest  240,174  in Booking Holdings on October 3, 2024 and sell it today you would earn a total of  256,668  from holding Booking Holdings or generate 106.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.42%
Values	Daily Returns

Booking Holdings  vs.  Sabre

Booking Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Booking Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Sabre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Sabre is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Booking Holdings and Sabre

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

The idea behind Booking Holdings and Sabre 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.