Correlation Between MBIA and Assurant

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

By analyzing existing cross correlation between MBIA Inc and Assurant, you can compare the effects of market volatilities on MBIA and Assurant 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 MBIA with a short position of Assurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of MBIA and Assurant.

Diversification Opportunities for MBIA and Assurant

0.95

Correlation Coefficient

MBIA  Assurant

Almost no diversification

The 3 months correlation between MBIA and Assurant is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding MBIA Inc and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and MBIA 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 MBIA Inc are associated (or correlated) with Assurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assurant has no effect on the direction of MBIA i.e., MBIA and Assurant go up and down completely randomly.

Pair Corralation between MBIA and Assurant

Considering the 90-day investment horizon MBIA Inc is expected to generate 3.34 times more return on investment than Assurant. However, MBIA is 3.34 times more volatile than Assurant. It trades about 0.04 of its potential returns per unit of risk. Assurant is currently generating about 0.11 per unit of risk. If you would invest  420.00  in MBIA Inc on October 5, 2024 and sell it today you would earn a total of  263.00  from holding MBIA Inc or generate 62.62% return on investment over 90 days.

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

MBIA Inc  vs.  Assurant

MBIA Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MBIA Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental drivers, MBIA demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Assurant

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Assurant are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Assurant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MBIA and Assurant

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

The idea behind MBIA Inc and Assurant 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.