Correlation Between WisdomTree Investments and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and Ambac Financial 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 WisdomTree Investments and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and Ambac Financial Group, you can compare the effects of market volatilities on WisdomTree Investments and Ambac Financial 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 WisdomTree Investments with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and Ambac Financial.
Diversification Opportunities for WisdomTree Investments and Ambac Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Ambac is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group and WisdomTree Investments 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 WisdomTree Investments are associated (or correlated) with Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and Ambac Financial go up and down completely randomly.
Pair Corralation between WisdomTree Investments and Ambac Financial
Assuming the 90 days horizon WisdomTree Investments is expected to under-perform the Ambac Financial. In addition to that, WisdomTree Investments is 1.36 times more volatile than Ambac Financial Group. It trades about -0.12 of its total potential returns per unit of risk. Ambac Financial Group is currently generating about 0.05 per unit of volatility. If you would invest 1,140 in Ambac Financial Group on September 22, 2024 and sell it today you would earn a total of 20.00 from holding Ambac Financial Group or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. Ambac Financial Group
Performance |
| Timeline |
| WisdomTree Investments |
| Ambac Financial Group |
WisdomTree Investments and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and Ambac Financial
The main advantage of trading using opposite WisdomTree Investments and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, Ambac Financial 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 Ambac Financial will offset losses from the drop in Ambac Financial's long position.| WisdomTree Investments vs. InPlay Oil Corp | WisdomTree Investments vs. Fukuyama Transporting Co | WisdomTree Investments vs. PLAY2CHILL SA ZY | WisdomTree Investments vs. Playtech plc |
| Ambac Financial vs. WisdomTree Investments | Ambac Financial vs. SLR Investment Corp | Ambac Financial vs. EAT WELL INVESTMENT | Ambac Financial vs. New Residential 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 the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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