Correlation Between Sabre Corpo and MI Homes

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

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

Diversification Opportunities for Sabre Corpo and MI Homes

-0.23

Correlation Coefficient

Sabre Corpo  MI Homes

Very good diversification

The 3 months correlation between Sabre and MHO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corpo and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes and Sabre Corpo 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 Sabre Corpo are associated (or correlated) with MI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Homes has no effect on the direction of Sabre Corpo i.e., Sabre Corpo and MI Homes go up and down completely randomly.

Pair Corralation between Sabre Corpo and MI Homes

Given the investment horizon of 90 days Sabre Corpo is expected to generate 1.7 times more return on investment than MI Homes. However, Sabre Corpo is 1.7 times more volatile than MI Homes. It trades about 0.03 of its potential returns per unit of risk. MI Homes is currently generating about -0.12 per unit of risk. If you would invest  368.00  in Sabre Corpo on September 26, 2024 and sell it today you would earn a total of  6.00  from holding Sabre Corpo or generate 1.63% return on investment over 90 days.

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

Sabre Corpo  vs.  MI Homes

Sabre Corpo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MI Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sabre Corpo and MI Homes

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

The idea behind Sabre Corpo and MI Homes 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.