Correlation Between Costco Wholesale and Sabre Insurance

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

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

Diversification Opportunities for Costco Wholesale and Sabre Insurance

-0.55

Correlation Coefficient

Costco Wholesale  Sabre Insurance

Excellent diversification

The 3 months correlation between Costco and Sabre is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp 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 Costco Wholesale 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 Costco Wholesale Corp 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 Costco Wholesale i.e., Costco Wholesale and Sabre Insurance go up and down completely randomly.

Pair Corralation between Costco Wholesale and Sabre Insurance

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the Sabre Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 1.29 times less risky than Sabre Insurance. The stock trades about -0.03 of its potential returns per unit of risk. The Sabre Insurance Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,640  in Sabre Insurance Group on April 25, 2025 and sell it today you would earn a total of  2,240  from holding Sabre Insurance Group or generate 17.72% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  Sabre Insurance Group

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

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

Sabre Insurance Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sabre Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Costco Wholesale and Sabre Insurance

The main advantage of trading using opposite Costco Wholesale and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale 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 Costco Wholesale Corp 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.