Correlation Between Booking Holdings and Sabre Corpo

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

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

Diversification Opportunities for Booking Holdings and Sabre Corpo

0.45

Correlation Coefficient

Booking Holdings  Sabre Corpo

Very weak diversification

The 3 months correlation between Booking and Sabre is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Sabre Corpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corpo and Booking Holdings 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 Booking Holdings are associated (or correlated) with Sabre Corpo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corpo has no effect on the direction of Booking Holdings i.e., Booking Holdings and Sabre Corpo go up and down completely randomly.

Pair Corralation between Booking Holdings and Sabre Corpo

Given the investment horizon of 90 days Booking Holdings is expected to under-perform the Sabre Corpo. But the stock apears to be less risky and, when comparing its historical volatility, Booking Holdings is 2.15 times less risky than Sabre Corpo. The stock trades about -0.1 of its potential returns per unit of risk. The Sabre Corpo is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  242.00  in Sabre Corpo on February 1, 2024 and sell it today you would earn a total of  45.00  from holding Sabre Corpo or generate 18.6% return on investment over 90 days.

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

Booking Holdings  vs.  Sabre Corpo

Booking Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Booking Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Booking Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sabre Corpo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Corpo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Booking Holdings and Sabre Corpo

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

The idea behind Booking Holdings and Sabre Corpo 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.