Correlation Between Sabre Insurance and Constellation Software

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

Diversification Opportunities for Sabre Insurance and Constellation Software

-0.22

Correlation Coefficient

Sabre Insurance  Constellation Software

Very good diversification

The 3 months correlation between Sabre and Constellation is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software 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 Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Sabre Insurance i.e., Sabre Insurance and Constellation Software go up and down completely randomly.

Pair Corralation between Sabre Insurance and Constellation Software

Assuming the 90 days horizon Sabre Insurance Group is expected to generate 1.88 times more return on investment than Constellation Software. However, Sabre Insurance is 1.88 times more volatile than Constellation Software. It trades about 0.12 of its potential returns per unit of risk. Constellation Software is currently generating about 0.04 per unit of risk. If you would invest  147.00  in Sabre Insurance Group on April 24, 2025 and sell it today you would earn a total of  24.00  from holding Sabre Insurance Group or generate 16.33% return on investment over 90 days.

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

Sabre Insurance Group  vs.  Constellation Software

Sabre Insurance Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabre Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sabre Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Constellation Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Constellation Software 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 Constellation Software

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

The idea behind Sabre Insurance Group and Constellation Software 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.