Correlation Between Sabre Insurance and Hargreaves Lansdown

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

Diversification Opportunities for Sabre Insurance and Hargreaves Lansdown

0.22

Correlation Coefficient

Sabre Insurance  Hargreaves Lansdown

Modest diversification

The 3 months correlation between Sabre and Hargreaves is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Hargreaves Lansdown plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hargreaves Lansdown plc 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 Hargreaves Lansdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hargreaves Lansdown plc has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Sabre Insurance and Hargreaves Lansdown

Assuming the 90 days trading horizon Sabre Insurance is expected to generate 1.22 times less return on investment than Hargreaves Lansdown. In addition to that, Sabre Insurance is 14.63 times more volatile than Hargreaves Lansdown plc. It trades about 0.01 of its total potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.22 per unit of volatility. If you would invest  108,600  in Hargreaves Lansdown plc on October 25, 2024 and sell it today you would earn a total of  1,750  from holding Hargreaves Lansdown plc or generate 1.61% return on investment over 90 days.

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

Sabre Insurance Group  vs.  Hargreaves Lansdown plc

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.

Hargreaves Lansdown plc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hargreaves Lansdown plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hargreaves Lansdown is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sabre Insurance and Hargreaves Lansdown

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

The idea behind Sabre Insurance Group and Hargreaves Lansdown plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.