Correlation Between Assured Guaranty and Trupanion
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Trupanion 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 Trupanion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Trupanion, you can compare the effects of market volatilities on Assured Guaranty and Trupanion 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 Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Trupanion.
Diversification Opportunities for Assured Guaranty and Trupanion
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Assured and Trupanion is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Trupanion go up and down completely randomly.
Pair Corralation between Assured Guaranty and Trupanion
Considering the 90-day investment horizon Assured Guaranty is expected to generate 0.17 times more return on investment than Trupanion. However, Assured Guaranty is 5.73 times less risky than Trupanion. It trades about -0.2 of its potential returns per unit of risk. Trupanion is currently generating about -0.29 per unit of risk. If you would invest 9,388 in Assured Guaranty on November 27, 2024 and sell it today you would lose (407.00) from holding Assured Guaranty or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assured Guaranty vs. Trupanion
Performance |
| Timeline |
| Assured Guaranty |
| Trupanion |
Assured Guaranty and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Trupanion
The main advantage of trading using opposite Assured Guaranty and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Trupanion 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 Trupanion will offset losses from the drop in Trupanion's long position.| Assured Guaranty vs. AXIS Capital Holdings | Assured Guaranty vs. MBIA Inc | Assured Guaranty vs. Assurant | Assured Guaranty vs. American Financial Group |
| Trupanion vs. First American | Trupanion vs. Assurant | Trupanion vs. NMI Holdings | Trupanion vs. MGIC Investment Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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