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

0.23

Correlation Coefficient

AmTrust Financial  Alta Equipment

Modest diversification

The 3 months correlation between AmTrust and Alta is 0.23. 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 0.67 times more return on investment than Alta Equipment. However, AmTrust Financial Services is 1.49 times less risky than Alta Equipment. It trades about 0.03 of its potential returns per unit of risk. Alta Equipment Group is currently generating about -0.16 per unit of risk. If you would invest  1,412  in AmTrust Financial Services on December 2, 2024 and sell it today you would earn a total of  28.00  from holding AmTrust Financial Services or generate 1.98% return on investment over 90 days.

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

AmTrust Financial Services  vs.  Alta Equipment Group

AmTrust Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, AmTrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Alta Equipment Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alta Equipment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

The idea behind AmTrust Financial Services and Alta Equipment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .