Correlation Between Morgan Advanced and Sabre Insurance

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

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

Diversification Opportunities for Morgan Advanced and Sabre Insurance

0.36

Correlation Coefficient

Morgan Advanced  Sabre Insurance

Weak diversification

The 3 months correlation between Morgan and Sabre is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials 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 Morgan Advanced 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 Morgan Advanced Materials 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 Morgan Advanced i.e., Morgan Advanced and Sabre Insurance go up and down completely randomly.

Pair Corralation between Morgan Advanced and Sabre Insurance

Assuming the 90 days trading horizon Morgan Advanced Materials is expected to generate 1.64 times more return on investment than Sabre Insurance. However, Morgan Advanced is 1.64 times more volatile than Sabre Insurance Group. It trades about 0.02 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.14 per unit of risk. If you would invest  26,600  in Morgan Advanced Materials on October 22, 2024 and sell it today you would earn a total of  100.00  from holding Morgan Advanced Materials or generate 0.38% return on investment over 90 days.

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

Morgan Advanced Materials  vs.  Sabre Insurance Group

Morgan Advanced Materials

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Advanced Materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Morgan Advanced is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sabre Insurance Group

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Morgan Advanced and Sabre Insurance

The main advantage of trading using opposite Morgan Advanced and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Advanced 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 Morgan Advanced Materials 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.