Correlation Between Assured Guaranty and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Fidelity National 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 Fidelity National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Fidelity National Financial, you can compare the effects of market volatilities on Assured Guaranty and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Fidelity National.
Diversification Opportunities for Assured Guaranty and Fidelity National
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Assured and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Fidelity National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Fidelity National go up and down completely randomly.
Pair Corralation between Assured Guaranty and Fidelity National
Considering the 90-day investment horizon Assured Guaranty is expected to generate 1.44 times more return on investment than Fidelity National. However, Assured Guaranty is 1.44 times more volatile than Fidelity National Financial. It trades about 0.14 of its potential returns per unit of risk. Fidelity National Financial is currently generating about 0.11 per unit of risk. If you would invest 8,023 in Assured Guaranty on September 2, 2024 and sell it today you would earn a total of 1,305 from holding Assured Guaranty or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assured Guaranty vs. Fidelity National Financial
Performance |
| Timeline |
| Assured Guaranty |
| Fidelity National |
Assured Guaranty and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Fidelity National
The main advantage of trading using opposite Assured Guaranty and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Assured Guaranty vs. Employers Holdings | Assured Guaranty vs. AMERISAFE | Assured Guaranty vs. NMI Holdings | Assured Guaranty vs. Investors Title |
| Fidelity National vs. AXIS Capital Holdings | Fidelity National vs. Assured Guaranty | Fidelity National vs. Enact Holdings | Fidelity National vs. NMI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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