Correlation Between Nasdaq and Sabre Insurance

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

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

Diversification Opportunities for Nasdaq and Sabre Insurance

-0.62

Correlation Coefficient

Nasdaq  Sabre Insurance

Excellent diversification

The 3 months correlation between Nasdaq and Sabre is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Sabre Insurance go up and down completely randomly.

Pair Corralation between Nasdaq and Sabre Insurance

Given the investment horizon of 90 days Nasdaq is expected to generate 1.22 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Nasdaq Inc is 1.75 times less risky than Sabre Insurance. It trades about 0.12 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Sabre Insurance Group on September 27, 2024 and sell it today you would earn a total of  10.00  from holding Sabre Insurance Group or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Nasdaq Inc  vs.  Sabre Insurance Group

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Nasdaq and Sabre Insurance

The main advantage of trading using opposite Nasdaq and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.