Correlation Between Assured Guaranty and Radian

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

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

Diversification Opportunities for Assured Guaranty and Radian

-0.13

Correlation Coefficient

Assured Guaranty  Radian

Good diversification

The 3 months correlation between Assured and Radian is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Assured Guaranty and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group and Assured Guaranty 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 Assured Guaranty are associated (or correlated) with Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Assured Guaranty i.e., Assured Guaranty and Radian go up and down completely randomly.

Pair Corralation between Assured Guaranty and Radian

Assuming the 90 days horizon Assured Guaranty is expected to under-perform the Radian. In addition to that, Assured Guaranty is 1.16 times more volatile than Radian Group. It trades about -0.04 of its total potential returns per unit of risk. Radian Group is currently generating about 0.09 per unit of volatility. If you would invest  2,640  in Radian Group on April 21, 2025 and sell it today you would earn a total of  240.00  from holding Radian Group or generate 9.09% return on investment over 90 days.

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

Assured Guaranty  vs.  Radian Group

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.

Radian Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radian Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Radian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Assured Guaranty and Radian

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

The idea behind Assured Guaranty and Radian 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 Stocks Directory module to find actively traded stocks across global markets.