Correlation Between Assured Guaranty and AXIS Capital
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and AXIS Capital 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 Assured Guaranty and AXIS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and AXIS Capital Holdings, you can compare the effects of market volatilities on Assured Guaranty and AXIS Capital 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 Assured Guaranty with a short position of AXIS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and AXIS Capital.
Diversification Opportunities for Assured Guaranty and AXIS Capital
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Assured and AXIS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and AXIS Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXIS Capital Holdings and Assured Guaranty 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 Assured Guaranty are associated (or correlated) with AXIS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXIS Capital Holdings has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and AXIS Capital go up and down completely randomly.
Pair Corralation between Assured Guaranty and AXIS Capital
Considering the 90-day investment horizon Assured Guaranty is expected to generate 0.8 times more return on investment than AXIS Capital. However, Assured Guaranty is 1.25 times less risky than AXIS Capital. It trades about 0.23 of its potential returns per unit of risk. AXIS Capital Holdings is currently generating about 0.05 per unit of risk. If you would invest 8,881 in Assured Guaranty on November 9, 2024 and sell it today you would earn a total of 526.00 from holding Assured Guaranty or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Assured Guaranty vs. AXIS Capital Holdings
Performance |
| Timeline |
| Assured Guaranty |
| AXIS Capital Holdings |
Assured Guaranty and AXIS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and AXIS Capital
The main advantage of trading using opposite Assured Guaranty and AXIS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, AXIS Capital 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 AXIS Capital will offset losses from the drop in AXIS Capital's long position.| Assured Guaranty vs. AXIS Capital Holdings | Assured Guaranty vs. MBIA Inc | Assured Guaranty vs. Assurant | Assured Guaranty vs. American Financial Group |
| AXIS Capital vs. Ambac Financial Group | AXIS Capital vs. Employers Holdings | AXIS Capital vs. James River Group | AXIS Capital vs. Assured Guaranty |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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