Correlation Between Sabre Insurance and Eco Oil

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

Diversification Opportunities for Sabre Insurance and Eco Oil

0.64

Correlation Coefficient

Sabre Insurance  Eco Oil

Poor diversification

The 3 months correlation between Sabre and Eco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Oil Gas 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 Eco Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Oil Gas has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Eco Oil go up and down completely randomly.

Pair Corralation between Sabre Insurance and Eco Oil

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 0.5 times more return on investment than Eco Oil. However, Sabre Insurance Group is 2.01 times less risky than Eco Oil. It trades about -0.09 of its potential returns per unit of risk. Eco Oil Gas is currently generating about -0.15 per unit of risk. If you would invest  13,800  in Sabre Insurance Group on December 27, 2024 and sell it today you would lose (1,100) from holding Sabre Insurance Group or give up 7.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Sabre Insurance Group  vs.  Eco Oil Gas

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.

Eco Oil Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sabre Insurance and Eco Oil

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

The idea behind Sabre Insurance Group and Eco Oil Gas 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.