Correlation Between ARISTOCRAT LEISURE and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Ambac Financial Group, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Ambac Financial.
Diversification Opportunities for ARISTOCRAT LEISURE and Ambac Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARISTOCRAT and Ambac is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Ambac Financial go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Ambac Financial
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.24 times less return on investment than Ambac Financial. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 2.83 times less risky than Ambac Financial. It trades about 0.18 of its potential returns per unit of risk. Ambac Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Ambac Financial Group on October 11, 2024 and sell it today you would earn a total of 80.00 from holding Ambac Financial Group or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.44% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Ambac Financial Group
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Ambac Financial Group |
ARISTOCRAT LEISURE and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Ambac Financial
The main advantage of trading using opposite ARISTOCRAT LEISURE and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. TITAN MACHINERY | ARISTOCRAT LEISURE vs. Dairy Farm International | ARISTOCRAT LEISURE vs. WIMFARM SA EO | ARISTOCRAT LEISURE vs. Sumitomo Mitsui Construction |
| Ambac Financial vs. ARISTOCRAT LEISURE | Ambac Financial vs. PLAY2CHILL SA ZY | Ambac Financial vs. QBE Insurance Group | Ambac Financial vs. Universal 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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