Correlation Between MBIA and James River

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

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

Diversification Opportunities for MBIA and James River

0.7

Correlation Coefficient

MBIA  James River

Poor diversification

The 3 months correlation between MBIA and James is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MBIA Inc and James River Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James River Group 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 James River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James River Group has no effect on the direction of MBIA i.e., MBIA and James River go up and down completely randomly.

Pair Corralation between MBIA and James River

Considering the 90-day investment horizon MBIA Inc is expected to under-perform the James River. But the stock apears to be less risky and, when comparing its historical volatility, MBIA Inc is 1.06 times less risky than James River. The stock trades about -0.05 of its potential returns per unit of risk. The James River Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  483.00  in James River Group on December 27, 2024 and sell it today you would lose (47.00) from holding James River Group or give up 9.73% of portfolio value over 90 days.

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

MBIA Inc  vs.  James River Group

MBIA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MBIA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

James River Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days James River Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, James River is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MBIA and James River

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

The idea behind MBIA Inc and James River Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.