Correlation Between Associated Capital and Radian
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Radian 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 Associated Capital and Radian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Radian Group, you can compare the effects of market volatilities on Associated Capital and Radian 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 Associated Capital with a short position of Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Radian.
Diversification Opportunities for Associated Capital and Radian
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Radian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group and Associated Capital 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 Associated Capital Group are associated (or correlated) with Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Associated Capital i.e., Associated Capital and Radian go up and down completely randomly.
Pair Corralation between Associated Capital and Radian
Allowing for the 90-day total investment horizon Associated Capital is expected to generate 1.83 times less return on investment than Radian. But when comparing it to its historical volatility, Associated Capital Group is 2.1 times less risky than Radian. It trades about 0.04 of its potential returns per unit of risk. Radian Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,502 in Radian Group on August 31, 2024 and sell it today you would earn a total of 52.00 from holding Radian Group or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Radian Group
Performance |
| Timeline |
| Associated Capital |
| Radian Group |
Associated Capital and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Radian
The main advantage of trading using opposite Associated Capital and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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