Correlation Between AmTrust Financial and Alta Equipment
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Alta Equipment 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 AmTrust Financial and Alta Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmTrust Financial Services and Alta Equipment Group, you can compare the effects of market volatilities on AmTrust Financial and Alta Equipment 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 AmTrust Financial with a short position of Alta Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Alta Equipment.
Diversification Opportunities for AmTrust Financial and Alta Equipment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AmTrust and Alta is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Alta Equipment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Equipment Group and AmTrust 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 AmTrust Financial Services are associated (or correlated) with Alta Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Equipment Group has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Alta Equipment go up and down completely randomly.
Pair Corralation between AmTrust Financial and Alta Equipment
Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.45 times more return on investment than Alta Equipment. However, AmTrust Financial Services is 2.23 times less risky than Alta Equipment. It trades about 0.04 of its potential returns per unit of risk. Alta Equipment Group is currently generating about -0.09 per unit of risk. If you would invest 1,359 in AmTrust Financial Services on December 28, 2024 and sell it today you would earn a total of 56.00 from holding AmTrust Financial Services or generate 4.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AmTrust Financial Services vs. Alta Equipment Group
Performance |
Timeline |
AmTrust Financial |
Alta Equipment Group |
AmTrust Financial and Alta Equipment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AmTrust Financial and Alta Equipment
The main advantage of trading using opposite AmTrust Financial and Alta Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Alta Equipment 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 Alta Equipment will offset losses from the drop in Alta Equipment's long position.AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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