Correlation Between Sabre Corp and NetApp

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

Diversification Opportunities for Sabre Corp and NetApp

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Sabre and NetApp is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Corp and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Sabre Corp 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 Corp are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Sabre Corp i.e., Sabre Corp and NetApp go up and down completely randomly.

Pair Corralation between Sabre Corp and NetApp

Given the investment horizon of 90 days Sabre Corp is expected to generate 2.87 times more return on investment than NetApp. However, Sabre Corp is 2.87 times more volatile than NetApp Inc. It trades about -0.09 of its potential returns per unit of risk. NetApp Inc is currently generating about -0.29 per unit of risk. If you would invest  756.00  in Sabre Corp on April 8, 2022 and sell it today you would lose (96.00)  from holding Sabre Corp or give up 12.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Sabre Corp  vs.  NetApp Inc

 Performance (%) 
      Timeline 
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 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.

NetApp Price Channel

Sabre Corp and NetApp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Sabre Corp and NetApp

The main advantage of trading using opposite Sabre Corp and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Corp position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.
The idea behind Sabre Corp and NetApp Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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