Correlation Between AmTrust Financial and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both AmTrust Financial and Nova Lithium 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 Nova Lithium 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 Nova Lithium Corp, you can compare the effects of market volatilities on AmTrust Financial and Nova Lithium 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 Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmTrust Financial and Nova Lithium.
Diversification Opportunities for AmTrust Financial and Nova Lithium
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between AmTrust and Nova is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AmTrust Financial Services and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp 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 Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of AmTrust Financial i.e., AmTrust Financial and Nova Lithium go up and down completely randomly.
Pair Corralation between AmTrust Financial and Nova Lithium
Assuming the 90 days horizon AmTrust Financial Services is expected to generate 0.19 times more return on investment than Nova Lithium. However, AmTrust Financial Services is 5.26 times less risky than Nova Lithium. It trades about 0.04 of its potential returns per unit of risk. Nova Lithium Corp is currently generating about -0.08 per unit of risk. If you would invest 1,403 in AmTrust Financial Services on December 2, 2024 and sell it today you would earn a total of 37.00 from holding AmTrust Financial Services or generate 2.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AmTrust Financial Services vs. Nova Lithium Corp
Performance |
Timeline |
AmTrust Financial |
Nova Lithium Corp |
AmTrust Financial and Nova Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AmTrust Financial and Nova Lithium
The main advantage of trading using opposite AmTrust Financial and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmTrust Financial position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium'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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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