Correlation Between Ambac Financial and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both Ambac Financial and ICC 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 Ambac Financial and ICC Holdings 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 ICC Holdings, you can compare the effects of market volatilities on Ambac Financial and ICC 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 Ambac Financial with a short position of ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and ICC Holdings.
Diversification Opportunities for Ambac Financial and ICC Holdings
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ambac and ICC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of Ambac Financial i.e., Ambac Financial and ICC Holdings go up and down completely randomly.
Pair Corralation between Ambac Financial and ICC Holdings
Given the investment horizon of 90 days Ambac Financial Group is expected to generate 8.41 times more return on investment than ICC Holdings. However, Ambac Financial is 8.41 times more volatile than ICC Holdings. It trades about 0.16 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.19 per unit of risk. If you would invest 1,144 in Ambac Financial Group on August 27, 2024 and sell it today you would earn a total of 111.00 from holding Ambac Financial Group or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Ambac Financial Group vs. ICC Holdings
Performance |
| Timeline |
| Ambac Financial Group |
| ICC Holdings |
Ambac Financial and ICC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and ICC Holdings
The main advantage of trading using opposite Ambac Financial and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial position performs unexpectedly, ICC 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 ICC Holdings will offset losses from the drop in ICC Holdings' long position.| Ambac Financial vs. Employers Holdings | Ambac Financial vs. James River Group | Ambac Financial vs. Assured Guaranty | Ambac Financial vs. ICC Holdings |
| ICC Holdings vs. Employers Holdings | ICC Holdings vs. AMERISAFE | ICC Holdings vs. NMI Holdings | ICC Holdings vs. Investors Title |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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