Correlation Between Sabre Insurance and Old Republic

Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and Old Republic 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 Old Republic 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 Old Republic International, you can compare the effects of market volatilities on Sabre Insurance and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and Old Republic.

Diversification Opportunities for Sabre Insurance and Old Republic

0.0

Correlation Coefficient

Sabre Insurance  Old Republic

Pay attention - limited upside

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

Pair Corralation between Sabre Insurance and Old Republic

Assuming the 90 days horizon Sabre Insurance Group is expected to under-perform the Old Republic. In addition to that, Sabre Insurance is 2.1 times more volatile than Old Republic International. It trades about -0.03 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.08 per unit of volatility. If you would invest  2,262  in Old Republic International on September 19, 2024 and sell it today you would earn a total of  1,301  from holding Old Republic International or generate 57.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sabre Insurance Group  vs.  Old Republic International

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.

Old Republic Interna

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sabre Insurance and Old Republic

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

The idea behind Sabre Insurance Group and Old Republic International 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.