Correlation Between Sabre Insurance and Hertz Global

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

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

Diversification Opportunities for Sabre Insurance and Hertz Global

0.0

Correlation Coefficient

Sabre Insurance  Hertz Global

Pay attention - limited upside

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

Pair Corralation between Sabre Insurance and Hertz Global

Assuming the 90 days horizon Sabre Insurance Group is expected to generate 0.63 times more return on investment than Hertz Global. However, Sabre Insurance Group is 1.59 times less risky than Hertz Global. It trades about -0.03 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about -0.05 per unit of risk. If you would invest  1,031  in Sabre Insurance Group on October 5, 2024 and sell it today you would lose (527.00) from holding Sabre Insurance Group or give up 51.12% of portfolio value over 90 days.

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

Sabre Insurance Group  vs.  Hertz Global Holdings

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. In spite of fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hertz Global Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabre Insurance and Hertz Global

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

The idea behind Sabre Insurance Group and Hertz Global Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.