Correlation Between Sabre Insurance and Tyson Foods

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

Diversification Opportunities for Sabre Insurance and Tyson Foods

-0.52

Correlation Coefficient

Sabre Insurance  Tyson Foods

Excellent diversification

The 3 months correlation between Sabre and Tyson is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Tyson Foods Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods Cl 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods Cl has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Tyson Foods go up and down completely randomly.

Pair Corralation between Sabre Insurance and Tyson Foods

Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Tyson Foods. In addition to that, Sabre Insurance is 1.15 times more volatile than Tyson Foods Cl. It trades about -0.02 of its total potential returns per unit of risk. Tyson Foods Cl is currently generating about -0.01 per unit of volatility. If you would invest  5,966  in Tyson Foods Cl on September 21, 2024 and sell it today you would lose (82.00) from holding Tyson Foods Cl or give up 1.37% of portfolio value over 90 days.

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

Sabre Insurance Group  vs.  Tyson Foods Cl

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.

Tyson Foods Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyson Foods Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tyson Foods is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sabre Insurance and Tyson Foods

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

The idea behind Sabre Insurance Group and Tyson Foods Cl 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.