Correlation Between HUMANA and Sabre Insurance

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

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

Diversification Opportunities for HUMANA and Sabre Insurance

0.0

Correlation Coefficient

HUMANA  Sabre Insurance

Pay attention - limited upside

The 3 months correlation between HUMANA and Sabre is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and HUMANA 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 HUMANA INC are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of HUMANA i.e., HUMANA and Sabre Insurance go up and down completely randomly.

Pair Corralation between HUMANA and Sabre Insurance

Assuming the 90 days trading horizon HUMANA INC is expected to generate 31.23 times more return on investment than Sabre Insurance. However, HUMANA is 31.23 times more volatile than Sabre Insurance Group. It trades about 0.07 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.03 per unit of risk. If you would invest  7,862  in HUMANA INC on September 19, 2024 and sell it today you would lose (167.00) from holding HUMANA INC or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.34%
Values	Daily Returns

HUMANA INC  vs.  Sabre Insurance Group

HUMANA INC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

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 fairly strong technical and fundamental indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and Sabre Insurance

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

The idea behind HUMANA INC and Sabre Insurance 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.