Correlation Between Ambac Financial and Tiptree

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

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

Diversification Opportunities for Ambac Financial and Tiptree

-0.59

Correlation Coefficient

Ambac Financial  Tiptree

Excellent diversification

The 3 months correlation between Ambac and Tiptree is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ambac Financial Group and Tiptree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiptree and Ambac Financial 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 Ambac Financial Group are associated (or correlated) with Tiptree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiptree has no effect on the direction of Ambac Financial i.e., Ambac Financial and Tiptree go up and down completely randomly.

Pair Corralation between Ambac Financial and Tiptree

Given the investment horizon of 90 days Ambac Financial Group is expected to under-perform the Tiptree. In addition to that, Ambac Financial is 1.32 times more volatile than Tiptree. It trades about -0.02 of its total potential returns per unit of risk. Tiptree is currently generating about 0.04 per unit of volatility. If you would invest  1,522  in Tiptree on May 5, 2025 and sell it today you would earn a total of  504.00  from holding Tiptree or generate 33.11% return on investment over 90 days.

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

Ambac Financial Group  vs.  Tiptree

Ambac Financial Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambac Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Ambac Financial may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Tiptree

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiptree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tiptree is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ambac Financial and Tiptree

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

The idea behind Ambac Financial Group and Tiptree 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.