Correlation Between Ambac Financial and First American
Can any of the company-specific risk be diversified away by investing in both Ambac Financial and First American 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 Ambac Financial and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambac Financial Group and First American, you can compare the effects of market volatilities on Ambac Financial and First American 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 Ambac Financial with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and First American.
Diversification Opportunities for Ambac Financial and First American
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambac and First is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and First American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American and Ambac Financial 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 Ambac Financial Group are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American has no effect on the direction of Ambac Financial i.e., Ambac Financial and First American go up and down completely randomly.
Pair Corralation between Ambac Financial and First American
Given the investment horizon of 90 days Ambac Financial Group is expected to under-perform the First American. In addition to that, Ambac Financial is 1.86 times more volatile than First American. It trades about -0.02 of its total potential returns per unit of risk. First American is currently generating about 0.02 per unit of volatility. If you would invest 6,163 in First American on September 12, 2024 and sell it today you would earn a total of 380.00 from holding First American or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambac Financial Group vs. First American
Performance |
| Timeline |
| Ambac Financial Group |
| First American |
Ambac Financial and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and First American
The main advantage of trading using opposite Ambac Financial and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Ambac Financial vs. First American | Ambac Financial vs. Assurant | Ambac Financial vs. NMI Holdings | Ambac Financial vs. MGIC Investment Corp |
| First American vs. Fidelity National Financial | First American vs. Stewart Information Services | First American vs. Old Republic International | First American 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |