Correlation Between Chiba Bank and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both Chiba Bank and Assured Guaranty 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 Chiba Bank and Assured Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and Assured Guaranty, you can compare the effects of market volatilities on Chiba Bank and Assured Guaranty 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 Chiba Bank with a short position of Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and Assured Guaranty.
Diversification Opportunities for Chiba Bank and Assured Guaranty
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chiba and Assured is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty and Chiba Bank 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 Chiba Bank are associated (or correlated) with Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of Chiba Bank i.e., Chiba Bank and Assured Guaranty go up and down completely randomly.
Pair Corralation between Chiba Bank and Assured Guaranty
Assuming the 90 days horizon Chiba Bank is expected to generate 1.37 times less return on investment than Assured Guaranty. But when comparing it to its historical volatility, Chiba Bank is 2.45 times less risky than Assured Guaranty. It trades about 0.23 of its potential returns per unit of risk. Assured Guaranty is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,400 in Assured Guaranty on October 23, 2024 and sell it today you would earn a total of 500.00 from holding Assured Guaranty or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. Assured Guaranty
Performance |
| Timeline |
| Chiba Bank |
| Assured Guaranty |
Chiba Bank and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and Assured Guaranty
The main advantage of trading using opposite Chiba Bank and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| Chiba Bank vs. CDN IMPERIAL BANK | Chiba Bank vs. Synovus Financial Corp | Chiba Bank vs. Xenia Hotels Resorts | Chiba Bank vs. PPHE HOTEL GROUP |
| Assured Guaranty vs. Thai Beverage Public | Assured Guaranty vs. Chiba Bank | Assured Guaranty vs. THAI BEVERAGE | Assured Guaranty vs. United Insurance 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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