Correlation Between Sabre Insurance and Arrow Electronics

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

Diversification Opportunities for Sabre Insurance and Arrow Electronics

0.61

Correlation Coefficient

Sabre Insurance  Arrow Electronics

Poor diversification

The 3 months correlation between Sabre and Arrow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Arrow Electronics go up and down completely randomly.

Pair Corralation between Sabre Insurance and Arrow Electronics

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 0.75 times more return on investment than Arrow Electronics. However, Sabre Insurance Group is 1.33 times less risky than Arrow Electronics. It trades about 0.0 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.01 per unit of risk. If you would invest  14,140  in Sabre Insurance Group on September 12, 2024 and sell it today you would lose (80.00) from holding Sabre Insurance Group or give up 0.57% of portfolio value over 90 days.

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

Sabre Insurance Group  vs.  Arrow Electronics

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 comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sabre Insurance and Arrow Electronics

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

The idea behind Sabre Insurance Group and Arrow Electronics 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.