Correlation Between PMI and Ambac Financial
Can any of the company-specific risk be diversified away by investing in both PMI 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 PMI and Ambac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The PMI Group and Ambac Financial Group, you can compare the effects of market volatilities on PMI 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 PMI with a short position of Ambac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PMI and Ambac Financial.
Diversification Opportunities for PMI and Ambac Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PMI and Ambac is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The PMI Group 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 PMI 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 The PMI Group 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 PMI i.e., PMI and Ambac Financial go up and down completely randomly.
Pair Corralation between PMI and Ambac Financial
Given the investment horizon of 90 days The PMI Group is expected to generate 2.56 times more return on investment than Ambac Financial. However, PMI is 2.56 times more volatile than Ambac Financial Group. It trades about 0.0 of its potential returns per unit of risk. Ambac Financial Group is currently generating about -0.02 per unit of risk. If you would invest 173.00 in The PMI Group on October 10, 2024 and sell it today you would lose (148.00) from holding The PMI Group or give up 85.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
The PMI Group vs. Ambac Financial Group
Performance |
| Timeline |
| PMI Group |
| Ambac Financial Group |
PMI and Ambac Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PMI and Ambac Financial
The main advantage of trading using opposite PMI and Ambac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PMI 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.| PMI vs. Ambac Financial Group | PMI vs. Assured Guaranty | PMI vs. Radian Group | PMI vs. MGIC Investment Corp |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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