Correlation Between Assured Guaranty and Radian
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Radian 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 Assured Guaranty and Radian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and Radian Group, you can compare the effects of market volatilities on Assured Guaranty and Radian 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 Assured Guaranty with a short position of Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Radian.
Diversification Opportunities for Assured Guaranty and Radian
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Assured and Radian is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group and Assured Guaranty 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 Assured Guaranty are associated (or correlated) with Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Radian go up and down completely randomly.
Pair Corralation between Assured Guaranty and Radian
Assuming the 90 days horizon Assured Guaranty is expected to generate 1.16 times less return on investment than Radian. In addition to that, Assured Guaranty is 1.75 times more volatile than Radian Group. It trades about 0.04 of its total potential returns per unit of risk. Radian Group is currently generating about 0.09 per unit of volatility. If you would invest 1,635 in Radian Group on September 14, 2024 and sell it today you would earn a total of 1,545 from holding Radian Group or generate 94.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assured Guaranty vs. Radian Group
Performance |
| Timeline |
| Assured Guaranty |
| Radian Group |
Assured Guaranty and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and Radian
The main advantage of trading using opposite Assured Guaranty and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| Assured Guaranty vs. First American Financial | Assured Guaranty vs. MGIC Investment | Assured Guaranty vs. Lancashire Holdings Limited | Assured Guaranty vs. Trisura Group |
| Radian vs. First American Financial | Radian vs. MGIC Investment | Radian vs. Lancashire Holdings Limited | Radian vs. Trisura 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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