Correlation Between Sabre Insurance and Liberty Media

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

Diversification Opportunities for Sabre Insurance and Liberty Media

-0.12

Correlation Coefficient

Sabre Insurance  Liberty Media

Good diversification

The 3 months correlation between Sabre and Liberty is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Liberty Media go up and down completely randomly.

Pair Corralation between Sabre Insurance and Liberty Media

Assuming the 90 days trading horizon Sabre Insurance is expected to generate 20.72 times less return on investment than Liberty Media. In addition to that, Sabre Insurance is 1.12 times more volatile than Liberty Media Corp. It trades about 0.01 of its total potential returns per unit of risk. Liberty Media Corp is currently generating about 0.22 per unit of volatility. If you would invest  6,896  in Liberty Media Corp on October 8, 2024 and sell it today you would earn a total of  1,561  from holding Liberty Media Corp or generate 22.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sabre Insurance Group  vs.  Liberty Media Corp

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Liberty Media Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Liberty Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabre Insurance and Liberty Media

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

The idea behind Sabre Insurance Group and Liberty Media Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.