Correlation Between Loews Corp and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both Loews Corp 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 Loews Corp and Assured Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Assured Guaranty, you can compare the effects of market volatilities on Loews Corp 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 Loews Corp with a short position of Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Assured Guaranty.
Diversification Opportunities for Loews Corp and Assured Guaranty
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loews and Assured is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty and Loews Corp 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 Loews Corp 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 Loews Corp i.e., Loews Corp and Assured Guaranty go up and down completely randomly.
Pair Corralation between Loews Corp and Assured Guaranty
Taking into account the 90-day investment horizon Loews Corp is expected to generate 1.76 times less return on investment than Assured Guaranty. But when comparing it to its historical volatility, Loews Corp is 1.25 times less risky than Assured Guaranty. It trades about 0.18 of its potential returns per unit of risk. Assured Guaranty is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 8,476 in Assured Guaranty on August 28, 2024 and sell it today you would earn a total of 993.00 from holding Assured Guaranty or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loews Corp vs. Assured Guaranty
Performance |
| Timeline |
| Loews Corp |
| Assured Guaranty |
Loews Corp and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and Assured Guaranty
The main advantage of trading using opposite Loews Corp and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp 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.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
| Assured Guaranty vs. Investors Title | Assured Guaranty vs. AMERISAFE | Assured Guaranty vs. Essent Group | Assured Guaranty 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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