Correlation Between Sabre Insurance and CAP LEASE

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

Diversification Opportunities for Sabre Insurance and CAP LEASE

-0.12

Correlation Coefficient

Sabre Insurance  CAP LEASE

Good diversification

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

Pair Corralation between Sabre Insurance and CAP LEASE

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 1.09 times more return on investment than CAP LEASE. However, Sabre Insurance is 1.09 times more volatile than CAP LEASE AVIATION. It trades about 0.01 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.05 per unit of risk. If you would invest  13,540  in Sabre Insurance Group on October 25, 2024 and sell it today you would earn a total of  60.00  from holding Sabre Insurance Group or generate 0.44% return on investment over 90 days.

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

Sabre Insurance Group  vs.  CAP LEASE AVIATION

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.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CAP LEASE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sabre Insurance and CAP LEASE

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

The idea behind Sabre Insurance Group and CAP LEASE AVIATION 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.