Correlation Between Employers Holdings and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both Employers Holdings and Ambac Financial 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 Employers Holdings and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Ambac Financial Group, you can compare the effects of market volatilities on Employers Holdings and Ambac Financial 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 Employers Holdings with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Ambac Financial.
Diversification Opportunities for Employers Holdings and Ambac Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Employers and Ambac is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group and Employers Holdings 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 Employers Holdings are associated (or correlated) with Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of Employers Holdings i.e., Employers Holdings and Ambac Financial go up and down completely randomly.
Pair Corralation between Employers Holdings and Ambac Financial
Considering the 90-day investment horizon Employers Holdings is expected to generate 0.78 times more return on investment than Ambac Financial. However, Employers Holdings is 1.29 times less risky than Ambac Financial. It trades about 0.24 of its potential returns per unit of risk. Ambac Financial Group is currently generating about 0.16 per unit of risk. If you would invest 4,767 in Employers Holdings on August 27, 2024 and sell it today you would earn a total of 558.00 from holding Employers Holdings or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Employers Holdings vs. Ambac Financial Group
Performance |
| Timeline |
| Employers Holdings |
| Ambac Financial Group |
Employers Holdings and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Ambac Financial
The main advantage of trading using opposite Employers Holdings and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings position performs unexpectedly, Ambac Financial 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 Ambac Financial will offset losses from the drop in Ambac Financial's long position.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| Ambac Financial vs. Employers Holdings | Ambac Financial vs. James River Group | Ambac Financial vs. Assured Guaranty | Ambac Financial vs. ICC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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