Correlation Between Sabre Insurance and Intermediate Capital

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

Diversification Opportunities for Sabre Insurance and Intermediate Capital

-0.18

Correlation Coefficient

Sabre Insurance  Intermediate Capital

Good diversification

The 3 months correlation between Sabre and Intermediate is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Intermediate Capital go up and down completely randomly.

Pair Corralation between Sabre Insurance and Intermediate Capital

Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Intermediate Capital. But the stock apears to be less risky and, when comparing its historical volatility, Sabre Insurance Group is 1.46 times less risky than Intermediate Capital. The stock trades about -0.09 of its potential returns per unit of risk. The Intermediate Capital Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  206,400  in Intermediate Capital Group on December 26, 2024 and sell it today you would earn a total of  200.00  from holding Intermediate Capital Group or generate 0.1% 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.  Intermediate Capital Group

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.

Intermediate Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital 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 Intermediate Capital

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

The idea behind Sabre Insurance Group and Intermediate Capital Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.