Correlation Between MSP Recovery and Assurant

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

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

Diversification Opportunities for MSP Recovery and Assurant

-0.69

Correlation Coefficient

MSP Recovery  Assurant

Excellent diversification

The 3 months correlation between MSP and Assurant is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and Assurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assurant and MSP Recovery 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 MSP Recovery 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 MSP Recovery i.e., MSP Recovery and Assurant go up and down completely randomly.

Pair Corralation between MSP Recovery and Assurant

Given the investment horizon of 90 days MSP Recovery is expected to generate 58.13 times more return on investment than Assurant. However, MSP Recovery is 58.13 times more volatile than Assurant. It trades about 0.06 of its potential returns per unit of risk. Assurant is currently generating about 0.04 per unit of risk. If you would invest  151.00  in MSP Recovery on October 4, 2024 and sell it today you would earn a total of  88.00  from holding MSP Recovery or generate 58.28% return on investment over 90 days.

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

MSP Recovery  vs.  Assurant

MSP Recovery

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, MSP Recovery reported solid returns over the last few months and may actually be approaching a breakup point.

Assurant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assurant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with MSP Recovery and Assurant

The main advantage of trading using opposite MSP Recovery and Assurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSP Recovery 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 MSP Recovery 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.