Correlation Between Paragon Banking and Sabre Insurance

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

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

Diversification Opportunities for Paragon Banking and Sabre Insurance

0.86

Correlation Coefficient

Paragon Banking  Sabre Insurance

Very poor diversification

The 3 months correlation between Paragon and Sabre is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Banking Group 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 Paragon Banking 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 Paragon Banking Group 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 Paragon Banking i.e., Paragon Banking and Sabre Insurance go up and down completely randomly.

Pair Corralation between Paragon Banking and Sabre Insurance

Assuming the 90 days trading horizon Paragon Banking is expected to generate 1.02 times less return on investment than Sabre Insurance. But when comparing it to its historical volatility, Paragon Banking Group is 1.14 times less risky than Sabre Insurance. It trades about 0.23 of its potential returns per unit of risk. 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Paragon Banking Group  vs.  Sabre Insurance Group

Paragon Banking Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon Banking Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Paragon Banking exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Paragon Banking and Sabre Insurance

The main advantage of trading using opposite Paragon Banking and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon Banking 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 Paragon Banking Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.