Correlation Between United Insurance and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both United Insurance and Assured Guaranty 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 United Insurance and Assured Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Assured Guaranty, you can compare the effects of market volatilities on United Insurance and Assured Guaranty 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 United Insurance with a short position of Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Assured Guaranty.
Diversification Opportunities for United Insurance and Assured Guaranty
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Assured is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty and United Insurance 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 United Insurance Holdings are associated (or correlated) with Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of United Insurance i.e., United Insurance and Assured Guaranty go up and down completely randomly.
Pair Corralation between United Insurance and Assured Guaranty
Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Assured Guaranty. But the stock apears to be less risky and, when comparing its historical volatility, United Insurance Holdings is 1.39 times less risky than Assured Guaranty. The stock trades about -0.1 of its potential returns per unit of risk. The Assured Guaranty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,400 in Assured Guaranty on October 23, 2024 and sell it today you would earn a total of 500.00 from holding Assured Guaranty or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Assured Guaranty
Performance |
| Timeline |
| United Insurance Holdings |
| Assured Guaranty |
United Insurance and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Assured Guaranty
The main advantage of trading using opposite United Insurance and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| United Insurance vs. Flutter Entertainment PLC | United Insurance vs. Tencent Music Entertainment | United Insurance vs. Grupo Media Capital | United Insurance vs. ON SEMICONDUCTOR |
| Assured Guaranty vs. Thai Beverage Public | Assured Guaranty vs. Chiba Bank | Assured Guaranty vs. THAI BEVERAGE | Assured Guaranty vs. United Insurance Holdings |
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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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