Correlation Between Mizuho Financial and Sabre Insurance

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

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

Diversification Opportunities for Mizuho Financial and Sabre Insurance

-0.13

Correlation Coefficient

Mizuho Financial  Sabre Insurance

Good diversification

The 3 months correlation between Mizuho and Sabre is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mizuho Financial Group 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 Mizuho Financial 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 Mizuho Financial Group 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 Mizuho Financial i.e., Mizuho Financial and Sabre Insurance go up and down completely randomly.

Pair Corralation between Mizuho Financial and Sabre Insurance

Assuming the 90 days trading horizon Mizuho Financial Group is expected to generate 0.91 times more return on investment than Sabre Insurance. However, Mizuho Financial Group is 1.1 times less risky than Sabre Insurance. It trades about 0.07 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.05 per unit of risk. If you would invest  260.00  in Mizuho Financial Group on October 5, 2024 and sell it today you would earn a total of  206.00  from holding Mizuho Financial Group or generate 79.23% return on investment over 90 days.

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

Mizuho Financial Group  vs.  Sabre Insurance Group

Mizuho Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Mizuho Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Mizuho Financial 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 Mizuho Financial and Sabre Insurance

The main advantage of trading using opposite Mizuho Financial and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mizuho Financial 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 Mizuho Financial Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.