Correlation Between Assured Guaranty and Hippo Holdings
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Hippo Holdings 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 Hippo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Hippo Holdings, you can compare the effects of market volatilities on Assured Guaranty and Hippo Holdings 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 Hippo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Hippo Holdings.
Diversification Opportunities for Assured Guaranty and Hippo Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Assured and Hippo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Hippo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hippo 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 Hippo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hippo Holdings has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Hippo Holdings go up and down completely randomly.
Pair Corralation between Assured Guaranty and Hippo Holdings
Considering the 90-day investment horizon Assured Guaranty is expected to generate 6.02 times less return on investment than Hippo Holdings. But when comparing it to its historical volatility, Assured Guaranty is 3.01 times less risky than Hippo Holdings. It trades about 0.19 of its potential returns per unit of risk. Hippo Holdings is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,892 in Hippo Holdings on August 24, 2024 and sell it today you would earn a total of 1,314 from holding Hippo Holdings or generate 69.45% 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. Hippo Holdings
Performance |
| Timeline |
| Assured Guaranty |
| Hippo Holdings |
Assured Guaranty and Hippo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Hippo Holdings
The main advantage of trading using opposite Assured Guaranty and Hippo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Hippo Holdings 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 Hippo Holdings will offset losses from the drop in Hippo Holdings' long position.| Assured Guaranty vs. AXIS Capital Holdings | Assured Guaranty vs. MBIA Inc | Assured Guaranty vs. Assurant | Assured Guaranty vs. American Financial Group |
| Hippo Holdings vs. ICC Holdings | Hippo Holdings vs. Employers Holdings | Hippo Holdings vs. AMERISAFE | Hippo Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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