Correlation Between Assured Guaranty and Nib Holdings

Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and Nib Holdings 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 Nib Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Assured Guaranty and nib holdings limited, you can compare the effects of market volatilities on Assured Guaranty and Nib Holdings 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 Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and Nib Holdings.

Diversification Opportunities for Assured Guaranty and Nib Holdings

-0.38

Correlation Coefficient

Assured Guaranty  Nib Holdings

Very good diversification

The 3 months correlation between Assured and Nib is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited 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 Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Nib Holdings go up and down completely randomly.

Pair Corralation between Assured Guaranty and Nib Holdings

Assuming the 90 days horizon Assured Guaranty is expected to generate 1.07 times more return on investment than Nib Holdings. However, Assured Guaranty is 1.07 times more volatile than nib holdings limited. It trades about 0.11 of its potential returns per unit of risk. nib holdings limited is currently generating about -0.04 per unit of risk. If you would invest  6,925  in Assured Guaranty on September 22, 2024 and sell it today you would earn a total of  1,425  from holding Assured Guaranty or generate 20.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Assured Guaranty  vs.  nib holdings limited

Assured Guaranty

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assured Guaranty are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Assured Guaranty reported solid returns over the last few months and may actually be approaching a breakup point.

nib holdings limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days nib holdings limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Assured Guaranty and Nib Holdings

The main advantage of trading using opposite Assured Guaranty and Nib Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, Nib Holdings 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 Nib Holdings will offset losses from the drop in Nib Holdings' long position.

The idea behind Assured Guaranty and nib holdings limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.