Correlation Between BAKER and Sabre Corpo

Can any of the company-specific risk be diversified away by investing in both BAKER and Sabre Corpo 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 BAKER and Sabre Corpo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAKER HUGHES A and Sabre Corpo, you can compare the effects of market volatilities on BAKER and Sabre Corpo 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 BAKER with a short position of Sabre Corpo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAKER and Sabre Corpo.

Diversification Opportunities for BAKER and Sabre Corpo

-0.19

Correlation Coefficient

BAKER  Sabre Corpo

Good diversification

The 3 months correlation between BAKER and Sabre is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BAKER HUGHES A and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo and BAKER 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 BAKER HUGHES A are associated (or correlated) with Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of BAKER i.e., BAKER and Sabre Corpo go up and down completely randomly.

Pair Corralation between BAKER and Sabre Corpo

Assuming the 90 days trading horizon BAKER HUGHES A is expected to under-perform the Sabre Corpo. But the bond apears to be less risky and, when comparing its historical volatility, BAKER HUGHES A is 11.17 times less risky than Sabre Corpo. The bond trades about -0.1 of its potential returns per unit of risk. The Sabre Corpo is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Sabre Corpo on October 3, 2024 and sell it today you would earn a total of  71.00  from holding Sabre Corpo or generate 24.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.81%
Values	Daily Returns

BAKER HUGHES A  vs.  Sabre Corpo

BAKER HUGHES A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAKER HUGHES A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sabre Corpo

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Corpo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabre Corpo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BAKER and Sabre Corpo

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

The idea behind BAKER HUGHES A and Sabre Corpo 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.