Correlation Between AmTrust Financial and KeyCorp

Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on AmTrust Financial and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and KeyCorp.

Diversification Opportunities for AmTrust Financial and KeyCorp

-0.34

Correlation Coefficient

AmTrust Financial  KeyCorp

Very good diversification

The 3 months correlation between AmTrust and KeyCorp is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and KeyCorp go up and down completely randomly.

Pair Corralation between AmTrust Financial and KeyCorp

Assuming the 90 days horizon AmTrust Financial Services is expected to under-perform the KeyCorp. In addition to that, AmTrust Financial is 3.34 times more volatile than KeyCorp. It trades about -0.05 of its total potential returns per unit of risk. KeyCorp is currently generating about -0.16 per unit of volatility. If you would invest  2,467  in KeyCorp on September 24, 2024 and sell it today you would lose (74.00) from holding KeyCorp or give up 3.0% of portfolio value over 90 days.

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

AmTrust Financial Services  vs.  KeyCorp

AmTrust Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 2 (%) 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.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AmTrust Financial and KeyCorp

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

The idea behind AmTrust Financial Services and KeyCorp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.