Correlation Between Ambac Financial and Trupanion
Can any of the company-specific risk be diversified away by investing in both Ambac Financial 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 Ambac Financial and Trupanion 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 Trupanion, you can compare the effects of market volatilities on Ambac Financial 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 Ambac Financial with a short position of Trupanion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and Trupanion.
Diversification Opportunities for Ambac Financial and Trupanion
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambac and Trupanion is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 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 Ambac Financial i.e., Ambac Financial and Trupanion go up and down completely randomly.
Pair Corralation between Ambac Financial and Trupanion
Given the investment horizon of 90 days Ambac Financial Group is expected to generate 0.98 times more return on investment than Trupanion. However, Ambac Financial Group is 1.02 times less risky than Trupanion. It trades about 0.19 of its potential returns per unit of risk. Trupanion is currently generating about -0.01 per unit of risk. If you would invest 1,144 in Ambac Financial Group on August 28, 2024 and sell it today you would earn a total of 138.00 from holding Ambac Financial Group or generate 12.06% 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. Trupanion
Performance |
| Timeline |
| Ambac Financial Group |
| Trupanion |
Ambac Financial and Trupanion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and Trupanion
The main advantage of trading using opposite Ambac Financial and Trupanion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial 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.| Ambac Financial vs. Employers Holdings | Ambac Financial vs. James River Group | Ambac Financial vs. Assured Guaranty | Ambac Financial vs. ICC Holdings |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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