Correlation Between Assured Guaranty and AMERISAFE
Can any of the company-specific risk be diversified away by investing in both Assured Guaranty and AMERISAFE 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 AMERISAFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assured Guaranty and AMERISAFE, you can compare the effects of market volatilities on Assured Guaranty and AMERISAFE 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 AMERISAFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assured Guaranty and AMERISAFE.
Diversification Opportunities for Assured Guaranty and AMERISAFE
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Assured and AMERISAFE is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and AMERISAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERISAFE 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 AMERISAFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERISAFE has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and AMERISAFE go up and down completely randomly.
Pair Corralation between Assured Guaranty and AMERISAFE
Considering the 90-day investment horizon Assured Guaranty is expected to generate 1.01 times more return on investment than AMERISAFE. However, Assured Guaranty is 1.01 times more volatile than AMERISAFE. It trades about 0.06 of its potential returns per unit of risk. AMERISAFE is currently generating about -0.16 per unit of risk. If you would invest 8,448 in Assured Guaranty on April 5, 2025 and sell it today you would earn a total of 102.00 from holding Assured Guaranty or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assured Guaranty vs. AMERISAFE
Performance |
| Timeline |
| Assured Guaranty |
| AMERISAFE |
Assured Guaranty and AMERISAFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assured Guaranty and AMERISAFE
The main advantage of trading using opposite Assured Guaranty and AMERISAFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assured Guaranty position performs unexpectedly, AMERISAFE 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 AMERISAFE will offset losses from the drop in AMERISAFE's long position.| Assured Guaranty vs. Quanex Building Products | Assured Guaranty vs. Grupo Simec SAB | Assured Guaranty vs. Worthington Steel | Assured Guaranty vs. CECO Environmental Corp |
| AMERISAFE vs. QuinStreet | AMERISAFE vs. Stagwell | AMERISAFE vs. Deluxe | AMERISAFE vs. Entravision Communications |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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