Correlation Between Assured Guaranty and Tiptree
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Tiptree 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 Tiptree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Tiptree, you can compare the effects of market volatilities on Assured Guaranty and Tiptree 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 Tiptree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Tiptree.
Diversification Opportunities for Assured Guaranty and Tiptree
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Assured and Tiptree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree 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 Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Tiptree go up and down completely randomly.
Pair Corralation between Assured Guaranty and Tiptree
Considering the 90-day investment horizon Assured Guaranty is expected to generate 1.2 times more return on investment than Tiptree. However, Assured Guaranty is 1.2 times more volatile than Tiptree. It trades about 0.19 of its potential returns per unit of risk. Tiptree is currently generating about 0.17 per unit of risk. If you would invest 8,413 in Assured Guaranty on August 24, 2024 and sell it today you would earn a total of 798.00 from holding Assured Guaranty or generate 9.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assured Guaranty vs. Tiptree
Performance |
| Timeline |
| Assured Guaranty |
| Tiptree |
Assured Guaranty and Tiptree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Tiptree
The main advantage of trading using opposite Assured Guaranty and Tiptree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Tiptree 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 Tiptree will offset losses from the drop in Tiptree's long position.| Assured Guaranty vs. AXIS Capital Holdings | Assured Guaranty vs. MBIA Inc | Assured Guaranty vs. Assurant | Assured Guaranty vs. American Financial Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
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