Correlation Between Sabre Insurance and Worldwide Healthcare

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

Diversification Opportunities for Sabre Insurance and Worldwide Healthcare

-0.34

Correlation Coefficient

Sabre Insurance  Worldwide Healthcare

Very good diversification

The 3 months correlation between Sabre and Worldwide is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between Sabre Insurance and Worldwide Healthcare

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 1.68 times more return on investment than Worldwide Healthcare. However, Sabre Insurance is 1.68 times more volatile than Worldwide Healthcare Trust. It trades about 0.04 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about -0.07 per unit of risk. If you would invest  13,200  in Sabre Insurance Group on October 26, 2024 and sell it today you would earn a total of  420.00  from holding Sabre Insurance Group or generate 3.18% 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.  Worldwide Healthcare Trust

Sabre Insurance Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Worldwide Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Sabre Insurance Group and Worldwide Healthcare Trust 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.