Correlation Between Sabre Insurance and New Residential

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

Diversification Opportunities for Sabre Insurance and New Residential

-0.71

Correlation Coefficient

Sabre Insurance  New Residential

Pay attention - limited upside

The 3 months correlation between Sabre and New is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and New Residential go up and down completely randomly.

Pair Corralation between Sabre Insurance and New Residential

Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the New Residential. In addition to that, Sabre Insurance is 1.18 times more volatile than New Residential Investment. It trades about -0.1 of its total potential returns per unit of risk. New Residential Investment is currently generating about 0.14 per unit of volatility. If you would invest  1,058  in New Residential Investment on December 23, 2024 and sell it today you would earn a total of  112.00  from holding New Residential Investment or generate 10.59% return on investment over 90 days.

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

Sabre Insurance Group  vs.  New Residential Investment

Sabre Insurance Group

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

New Residential Inve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sabre Insurance and New Residential

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

The idea behind Sabre Insurance Group and New Residential Investment 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.