Correlation Between Ambac Financial and James River
Can any of the company-specific risk be diversified away by investing in both Ambac Financial and James River 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 James River 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 James River Group, you can compare the effects of market volatilities on Ambac Financial and James River 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 James River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and James River.
Diversification Opportunities for Ambac Financial and James River
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ambac and James is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and James River Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James River Group 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 James River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James River Group has no effect on the direction of Ambac Financial i.e., Ambac Financial and James River go up and down completely randomly.
Pair Corralation between Ambac Financial and James River
Given the investment horizon of 90 days Ambac Financial Group is expected to generate 0.48 times more return on investment than James River. However, Ambac Financial Group is 2.08 times less risky than James River. It trades about 0.16 of its potential returns per unit of risk. James River Group is currently generating about -0.24 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambac Financial Group vs. James River Group
Performance |
| Timeline |
| Ambac Financial Group |
| James River Group |
Ambac Financial and James River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and James River
The main advantage of trading using opposite Ambac Financial and James River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial position performs unexpectedly, James River 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 James River will offset losses from the drop in James River's long position.| Ambac Financial vs. Employers Holdings | Ambac Financial vs. James River Group | Ambac Financial vs. Assured Guaranty | Ambac Financial vs. ICC Holdings |
| James River vs. Employers Holdings | James River vs. Investors Title | James River vs. AMERISAFE | James River vs. Essent 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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