Correlation Between Sabre Insurance and L3Harris Technologies

Can any of the company-specific risk be diversified away by investing in both Sabre Insurance and L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies, you can compare the effects of market volatilities on Sabre Insurance and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and L3Harris Technologies.

Diversification Opportunities for Sabre Insurance and L3Harris Technologies

-0.44

Correlation Coefficient

Sabre Insurance  L3Harris Technologies

Very good diversification

The 3 months correlation between Sabre and L3Harris is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and L3Harris Technologies go up and down completely randomly.

Pair Corralation between Sabre Insurance and L3Harris Technologies

Assuming the 90 days trading horizon Sabre Insurance Group is expected to generate 1.25 times more return on investment than L3Harris Technologies. However, Sabre Insurance is 1.25 times more volatile than L3Harris Technologies. It trades about 0.03 of its potential returns per unit of risk. L3Harris Technologies is currently generating about -0.26 per unit of risk. If you would invest  13,540  in Sabre Insurance Group on September 25, 2024 and sell it today you would earn a total of  240.00  from holding Sabre Insurance Group or generate 1.77% return on investment over 90 days.

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

Sabre Insurance Group  vs.  L3Harris Technologies

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

L3Harris Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sabre Insurance and L3Harris Technologies

The main advantage of trading using opposite Sabre Insurance and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.

The idea behind Sabre Insurance Group and L3Harris Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.