Correlation Between Invesco Health and Sabre Insurance

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

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

Diversification Opportunities for Invesco Health and Sabre Insurance

0.19

Correlation Coefficient

Invesco Health  Sabre Insurance

Average diversification

The 3 months correlation between Invesco and Sabre is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Health Care 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 Invesco Health 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 Invesco Health Care 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 Invesco Health i.e., Invesco Health and Sabre Insurance go up and down completely randomly.

Pair Corralation between Invesco Health and Sabre Insurance

Assuming the 90 days trading horizon Invesco Health is expected to generate 3.63 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Invesco Health Care is 2.52 times less risky than Sabre Insurance. It trades about 0.04 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,108  in Sabre Insurance Group on October 5, 2024 and sell it today you would earn a total of  4,772  from holding Sabre Insurance Group or generate 52.39% return on investment over 90 days.

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

Invesco Health Care  vs.  Sabre Insurance Group

Invesco Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private 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 comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Health and Sabre Insurance

The main advantage of trading using opposite Invesco Health and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Health 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 Invesco Health Care 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.