Correlation Between City Holding and Ambac Financial

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

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

Diversification Opportunities for City Holding and Ambac Financial

0.33

Correlation Coefficient

City Holding  Ambac Financial

Weak diversification

The 3 months correlation between City and Ambac is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding City Holding and Ambac Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambac Financial Group and City Holding 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 City Holding are associated (or correlated) with Ambac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambac Financial Group has no effect on the direction of City Holding i.e., City Holding and Ambac Financial go up and down completely randomly.

Pair Corralation between City Holding and Ambac Financial

Given the investment horizon of 90 days City Holding is expected to generate 1.94 times less return on investment than Ambac Financial. But when comparing it to its historical volatility, City Holding is 3.51 times less risky than Ambac Financial. It trades about 0.06 of its potential returns per unit of risk. Ambac Financial Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  810.00  in Ambac Financial Group on May 7, 2025 and sell it today you would earn a total of  17.00  from holding Ambac Financial Group or generate 2.1% return on investment over 90 days.

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

City Holding  vs.  Ambac Financial Group

City Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in City Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, City Holding is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with City Holding and Ambac Financial

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

The idea behind City Holding and Ambac Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.