Correlation Between Ambac Financial and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both Ambac Financial and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE, you can compare the effects of market volatilities on Ambac Financial and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and ARISTOCRAT LEISURE.
Diversification Opportunities for Ambac Financial and ARISTOCRAT LEISURE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ambac and ARISTOCRAT is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of Ambac Financial i.e., Ambac Financial and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between Ambac Financial and ARISTOCRAT LEISURE
Assuming the 90 days trading horizon Ambac Financial Group is expected to under-perform the ARISTOCRAT LEISURE. In addition to that, Ambac Financial is 2.21 times more volatile than ARISTOCRAT LEISURE. It trades about -0.01 of its total potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.15 per unit of volatility. If you would invest 1,997 in ARISTOCRAT LEISURE on October 11, 2024 and sell it today you would earn a total of 2,283 from holding ARISTOCRAT LEISURE or generate 114.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambac Financial Group vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| Ambac Financial Group |
| ARISTOCRAT LEISURE |
Ambac Financial and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambac Financial and ARISTOCRAT LEISURE
The main advantage of trading using opposite Ambac Financial and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambac Financial position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| Ambac Financial vs. ARISTOCRAT LEISURE | Ambac Financial vs. PLAY2CHILL SA ZY | Ambac Financial vs. QBE Insurance Group | Ambac Financial vs. Universal Insurance Holdings |
| ARISTOCRAT LEISURE vs. Playtech plc | ARISTOCRAT LEISURE vs. Addtech AB | ARISTOCRAT LEISURE vs. ASURE SOFTWARE | ARISTOCRAT LEISURE vs. SOFI TECHNOLOGIES |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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