Correlation Between NetApp and Sabre Corp

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Can any of the company-specific risk be diversified away by investing in both NetApp and Sabre Corp 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 NetApp and Sabre Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NetApp Inc and Sabre Corp, you can compare the effects of market volatilities on NetApp and Sabre Corp 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 NetApp with a short position of Sabre Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetApp and Sabre Corp.

Diversification Opportunities for NetApp and Sabre Corp

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between NetApp and Sabre is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Sabre Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Corp and NetApp 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 NetApp Inc are associated (or correlated) with Sabre Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Corp has no effect on the direction of NetApp i.e., NetApp and Sabre Corp go up and down completely randomly.

Pair Corralation between NetApp and Sabre Corp

Given the investment horizon of 90 days NetApp Inc is expected to generate 0.45 times more return on investment than Sabre Corp. However, NetApp Inc is 2.23 times less risky than Sabre Corp. It trades about 0.05 of its potential returns per unit of risk. Sabre Corp is currently generating about 0.01 per unit of risk. If you would invest  4,136  in NetApp Inc on April 4, 2022 and sell it today you would earn a total of  2,142  from holding NetApp Inc or generate 51.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

NetApp Inc  vs.  Sabre Corp

 Performance (%) 
      Timeline 
NetApp Inc 
NetApp Performance
0 of 100
Over the last 90 days NetApp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0319
Payout Ratio
0.38
Last Split Factor
2:1
Forward Annual Dividend Rate
2.0
Dividend Date
2022-07-27
Ex Dividend Date
2022-07-07
Last Split Date
2000-03-23

NetApp Price Channel

Sabre Corp 
Sabre Performance
0 of 100
Over the last 90 days Sabre Corp 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 August 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.1
Dividend Date
2020-03-30
Ex Dividend Date
2020-03-19

Sabre Price Channel

NetApp and Sabre Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with NetApp and Sabre Corp

The main advantage of trading using opposite NetApp and Sabre Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetApp position performs unexpectedly, Sabre Corp 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 Corp will offset losses from the drop in Sabre Corp's long position.
The idea behind NetApp Inc and Sabre Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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