Correlation Between Assurant and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both Assurant and Ambac Financial 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 Assurant and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and Ambac Financial Group, you can compare the effects of market volatilities on Assurant and Ambac Financial 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 Assurant with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and Ambac Financial.
Diversification Opportunities for Assurant and Ambac Financial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Assurant and Ambac is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group and Assurant 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 Assurant are associated (or correlated) with Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of Assurant i.e., Assurant and Ambac Financial go up and down completely randomly.
Pair Corralation between Assurant and Ambac Financial
Considering the 90-day investment horizon Assurant is expected to generate 0.56 times more return on investment than Ambac Financial. However, Assurant is 1.79 times less risky than Ambac Financial. It trades about 0.46 of its potential returns per unit of risk. Ambac Financial Group is currently generating about 0.2 per unit of risk. If you would invest 19,423 in Assurant on August 27, 2024 and sell it today you would earn a total of 3,321 from holding Assurant or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assurant vs. Ambac Financial Group
Performance |
| Timeline |
| Assurant |
| Ambac Financial Group |
Assurant and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assurant and Ambac Financial
The main advantage of trading using opposite Assurant and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant position performs unexpectedly, Ambac Financial 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 Ambac Financial will offset losses from the drop in Ambac Financial's long position.| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
| Ambac Financial vs. Employers Holdings | Ambac Financial vs. James River Group | Ambac Financial vs. Assured Guaranty | Ambac Financial vs. ICC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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