Correlation Between Ambac Financial and Horace Mann

Can any of the company-specific risk be diversified away by investing in both Ambac Financial and Horace Mann 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 Horace Mann 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 Horace Mann Educators, you can compare the effects of market volatilities on Ambac Financial and Horace Mann 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 Horace Mann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambac Financial and Horace Mann.

Diversification Opportunities for Ambac Financial and Horace Mann

0.08

Correlation Coefficient

Ambac Financial  Horace Mann

Significant diversification

The 3 months correlation between Ambac and Horace is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and Horace Mann Educators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horace Mann Educators 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 Horace Mann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horace Mann Educators has no effect on the direction of Ambac Financial i.e., Ambac Financial and Horace Mann go up and down completely randomly.

Pair Corralation between Ambac Financial and Horace Mann

Given the investment horizon of 90 days Ambac Financial Group is expected to under-perform the Horace Mann. In addition to that, Ambac Financial is 1.53 times more volatile than Horace Mann Educators. It trades about -0.03 of its total potential returns per unit of risk. Horace Mann Educators is currently generating about 0.04 per unit of volatility. If you would invest  3,144  in Horace Mann Educators on December 4, 2024 and sell it today you would earn a total of  1,004  from holding Horace Mann Educators or generate 31.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ambac Financial Group  vs.  Horace Mann Educators

Ambac Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ambac Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Horace Mann Educators

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horace Mann Educators are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Horace Mann is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ambac Financial and Horace Mann

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

The idea behind Ambac Financial Group and Horace Mann Educators 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.