Correlation Between FORWARD AIR and Sabre Insurance

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

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

Diversification Opportunities for FORWARD AIR and Sabre Insurance

0.87

Correlation Coefficient

FORWARD AIR  Sabre Insurance

Very poor diversification

The 3 months correlation between FORWARD and Sabre is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P 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 FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Sabre Insurance go up and down completely randomly.

Pair Corralation between FORWARD AIR and Sabre Insurance

Assuming the 90 days horizon FORWARD AIR P is expected to generate 2.07 times more return on investment than Sabre Insurance. However, FORWARD AIR is 2.07 times more volatile than Sabre Insurance Group. It trades about 0.23 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about 0.12 per unit of risk. If you would invest  1,290  in FORWARD AIR P on April 25, 2025 and sell it today you would earn a total of  1,045  from holding FORWARD AIR P or generate 81.01% return on investment over 90 days.

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

FORWARD AIR P  vs.  Sabre Insurance Group

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile basic indicators, Sabre Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and Sabre Insurance

The main advantage of trading using opposite FORWARD AIR and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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 FORWARD AIR P 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.