Correlation Between Radian and Ryan Specialty

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

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

Diversification Opportunities for Radian and Ryan Specialty

0.76

Correlation Coefficient

Radian  Ryan Specialty

Poor diversification

The 3 months correlation between Radian and Ryan is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Radian Group and Ryan Specialty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryan Specialty Group and Radian 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 Radian Group are associated (or correlated) with Ryan Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryan Specialty Group has no effect on the direction of Radian i.e., Radian and Ryan Specialty go up and down completely randomly.

Pair Corralation between Radian and Ryan Specialty

Considering the 90-day investment horizon Radian is expected to generate 2.57 times less return on investment than Ryan Specialty. But when comparing it to its historical volatility, Radian Group is 1.04 times less risky than Ryan Specialty. It trades about 0.05 of its potential returns per unit of risk. Ryan Specialty Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,217  in Ryan Specialty Group on October 2, 2024 and sell it today you would earn a total of  2,184  from holding Ryan Specialty Group or generate 51.8% return on investment over 90 days.

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

Radian Group  vs.  Ryan Specialty Group

Radian Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radian Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Radian is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Ryan Specialty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryan Specialty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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 Radian and Ryan Specialty

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

The idea behind Radian Group and Ryan Specialty 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.