Correlation Between MBIA and AMERISAFE

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

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

Diversification Opportunities for MBIA and AMERISAFE

-0.14

Correlation Coefficient

MBIA  AMERISAFE

Good diversification

The 3 months correlation between MBIA and AMERISAFE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MBIA Inc and AMERISAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERISAFE and MBIA 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 MBIA Inc are associated (or correlated) with AMERISAFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERISAFE has no effect on the direction of MBIA i.e., MBIA and AMERISAFE go up and down completely randomly.

Pair Corralation between MBIA and AMERISAFE

Considering the 90-day investment horizon MBIA Inc is expected to under-perform the AMERISAFE. In addition to that, MBIA is 3.12 times more volatile than AMERISAFE. It trades about -0.11 of its total potential returns per unit of risk. AMERISAFE is currently generating about -0.02 per unit of volatility. If you would invest  5,072  in AMERISAFE on January 18, 2025 and sell it today you would lose (119.00) from holding AMERISAFE or give up 2.35% of portfolio value over 90 days.

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

MBIA Inc  vs.  AMERISAFE

MBIA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MBIA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AMERISAFE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with MBIA and AMERISAFE

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

The idea behind MBIA Inc and AMERISAFE 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.