Correlation Between WSP Global and Assured Guaranty

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

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

Diversification Opportunities for WSP Global and Assured Guaranty

-0.65

Correlation Coefficient

WSP Global  Assured Guaranty

Excellent diversification

The 3 months correlation between WSP and Assured is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty and WSP Global 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 WSP Global are associated (or correlated) with Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of WSP Global i.e., WSP Global and Assured Guaranty go up and down completely randomly.

Pair Corralation between WSP Global and Assured Guaranty

Assuming the 90 days horizon WSP Global is expected to generate 0.66 times more return on investment than Assured Guaranty. However, WSP Global is 1.51 times less risky than Assured Guaranty. It trades about 0.15 of its potential returns per unit of risk. Assured Guaranty is currently generating about -0.03 per unit of risk. If you would invest  15,479  in WSP Global on April 25, 2025 and sell it today you would earn a total of  2,121  from holding WSP Global or generate 13.7% return on investment over 90 days.

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

WSP Global  vs.  Assured Guaranty

WSP Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WSP Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WSP Global reported solid returns over the last few months and may actually be approaching a breakup point.

Assured Guaranty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assured Guaranty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Assured Guaranty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WSP Global and Assured Guaranty

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

The idea behind WSP Global and Assured Guaranty 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.