Correlation Between AmTrust Financial and Joint Stock

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

Diversification Opportunities for AmTrust Financial and Joint Stock

0.1

Correlation Coefficient

AmTrust Financial  Joint Stock

Average diversification

The 3 months correlation between AmTrust and Joint is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Joint Stock go up and down completely randomly.

Pair Corralation between AmTrust Financial and Joint Stock

Assuming the 90 days horizon AmTrust Financial is expected to generate 3.1 times less return on investment than Joint Stock. But when comparing it to its historical volatility, AmTrust Financial Services is 1.13 times less risky than Joint Stock. It trades about 0.03 of its potential returns per unit of risk. Joint Stock is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,737  in Joint Stock on September 29, 2024 and sell it today you would earn a total of  3,934  from holding Joint Stock or generate 68.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.33%
Values	Daily Returns

AmTrust Financial Services  vs.  Joint Stock

AmTrust Financial

Risk-Adjusted Performance

1 of 100

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.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AmTrust Financial and Joint Stock

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

The idea behind AmTrust Financial Services and Joint Stock 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..