Correlation Between Sabio Holdings and Nickel Creek

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

By analyzing existing cross correlation between Sabio Holdings and Nickel Creek Platinum, you can compare the effects of market volatilities on Sabio Holdings and Nickel Creek 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 Sabio Holdings with a short position of Nickel Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabio Holdings and Nickel Creek.

Diversification Opportunities for Sabio Holdings and Nickel Creek

-0.53

Correlation Coefficient

Sabio Holdings  Nickel Creek

Excellent diversification

The 3 months correlation between Sabio and Nickel is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum and Sabio Holdings 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 Sabio Holdings are associated (or correlated) with Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Nickel Creek go up and down completely randomly.

Pair Corralation between Sabio Holdings and Nickel Creek

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 1.23 times more return on investment than Nickel Creek. However, Sabio Holdings is 1.23 times more volatile than Nickel Creek Platinum. It trades about 0.03 of its potential returns per unit of risk. Nickel Creek Platinum is currently generating about -0.1 per unit of risk. If you would invest  49.00  in Sabio Holdings on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Sabio Holdings or generate 2.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sabio Holdings  vs.  Nickel Creek Platinum

Sabio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Sabio Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nickel Creek Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sabio Holdings and Nickel Creek

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

The idea behind Sabio Holdings and Nickel Creek Platinum 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.